In a recent panel hosted by Benzinga, Yieldstreet CEO and co-founder, Milind Mehere, was joined by other prominent leaders in the alternative asset space for a discussion on the rising popularity of alternative investments. More specifically, the panel shared their thoughts on how platforms like Yieldstreet, CrowdStreet, Arrived, and Alumni Ventures have been instrumental in providing investors with unprecedented access to alternative opportunities, as well as an overall easier path toward portfolio diversification. Here are a few key takeaways from their discussion.
Alternatives Open Previously Locked Doors to Diversification, High Returns
Before alternative investment platforms came around, most ordinary investors didn’t have any exposure to a number of financial opportunities that were clearly yielding considerable profits for high net-worth individuals and private institutions. In fact, before new legislation was introduced in 2012 to reframe the language around what constitutes an accredited investor, even seemingly straightforward investments in real estate were off-limits to a significant portion of the population. So, the rise in popularity surrounding alternative assets isn’t necessarily because the potentially favorable returns they produced were a secret, but because regulations and the absence of platforms like Yieldstreet made them nearly impossible to access. In other words, as Yieldstreet CEO Milind Mehere pointed out, “people want to invest like the top 1%.”
Investors Don’t Want to Place All Their Trust in the Public Market
Even more than securing returns across multiple assets, diversification can help protect your overall portfolio from losses due to unforeseen events or market volatility. Investors today are increasingly hesitant to place their trust solely in the fluctuations of stocks and bonds, or as the CMO of CrowdStreet, Brent Hieggelke puts it, “[investors] don’t want to be correlated only with the public market.” This is yet another reason why some investors are seeking to diversify with potentially reliable alternatives; investing in private companies, such as a real estate developer with an established reputation of success, is a strategy for offsetting potential losses or volatility in the public market. Similarly, investing in something as tangible and familiar as real estate can also offset losses observed on riskier investments.
Alternative Investing is a Rapidly Evolving Space
It’s critical for anyone considering an investment in alternatives to understand that the definition of “alternative assets” is constantly evolving, and this is a subject that popped up on multiple occasions throughout the panel’s discussion. Largely as a result of rapid advancements in technology, the meaning of alternative has been expanded to include various emerging markets that, however potentially promising, have yet to reveal their true potential for long-term viability. For example, while cryptocurrency is certainly intriguing, and is often referred to as an alternative asset, there shouldn’t be any meaningful correlation drawn between investing in crypto and investing in a multi-asset fund.
Interested in learning more about how to diversify your portfolio with alternative investments? Catch the conversation in its entirety here.
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