FORBES: What Leaders Should Know About Alternative Investments
Today’s financial landscape is uncertain: initial jobless claims have risen consecutively, the crypto market has crashed, fears of a real estate market ensue, the stock market is in bear territory, bond yields have inverted, and futures markets signal trouble ahead.
While uncertain economic times are nothing new, the rate at which information is disseminated and the interconnectedness of global markets, is. As a result, it is more important than ever for leaders to be thoughtful and deliberate in their decision-making.
According to Nasdaq, diversification is among the best defences against market crashes, including the consideration of alternative investments. Harvard Business School defines them as investments in assets that are not publicly traded on stock exchanges. They are also sometimes called “non-traditional” or “specialty” investments, and include real estate, private equity, hedge funds, insurance-linked securities (“ILS”), and venture capital. Harvard reports that alternative investments are increasing in popularity and are expected to grow 18-24% by 2025. Knowledge about them should therefore be part of every leader’s financial education because many will soon face decisions regarding how to manage them as investors or recipients of capital, Harvard concludes.