Common Myths And Misconceptions About Alternative Investments

There are many myths about alternative investments – even the concept is misconstrued by many people, given the lack of mainstream awareness about these. The term is assumed to be some form of hedge funds or other high-risk, exotic funds that only high networth individuals and large institutions have access to. In reality, alternative investments are widely accessible and have a place in nearly every portfolio.

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Some other misconceptions surrounding these investments are the following:

Myth: Alternatives are considered a unique asset class

Others see alternative investment options as standalone asset types that are distinct from traditional asset classes, including stocks or bonds. Investing in alternatives actually represents different approaches to investment that span various markets and vehicles.

Myth: Alternatives are inherently more risky and volatile than traditional investments
Some alternative investment options can indeed experience higher volatility and illiquidity, however, they are not always worse than traditional asset classes. Additionally, alternative investments can be used as portfolio diversifiers, reducing overall volatility.

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Myth: Investing in a single alternative class will diversify the portfolio
There are people who assume that investing in one type of hedge fund or private equity is enough to diversify a portfolio that will withstand the market climate. As a matter of fact, a single alternative investment strategy will concentrate risk exposures. Multiple strategies will mitigate concentration risks.

Chicago-based Charles F. Whitman is the founder of Whitman Asset Management, a firm that provides alternative investment programs that target exceptional risk-adjusted returns. For more insights regarding alternative investment, follow this Twitter account.

Dynamic 2017: Navigating This Year’s Macroeconomic Trends

2016 has been pretty interesting for investors. The effects of political shifts in certain countries reverberated worldwide. The market has been pretty unpredictable.

2017 is still in its infancy, so there is still time to be wise a propos certain market trends.

One economic trend would be a heightened emphasis on United State stocks. Of course, one should not abandon international equities altogether, but it will pay to consider giving more weight to US companies. This is mainly driven by the assumption of power of President Donald Trump.

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Forex-wise, 2017 could also be the year of a stronger US dollar. To minimize some of the risks that will drag in, investors might want to look into certain mid-cap and small-cap US companies because they have less of an overseas focus compared to their larger-cap counterparts.

Lastly, one should never discount the benefits of a globally diversified portfolio. This is a result of the anticipated stimulation measures on the part of central banks across the globe to promote further economic growth. Allocations to international developed and emerging markets are therefore strongly encouraged.

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Charles Whitman is an investment strategist based in Chicago. He is the founder of Whitman Asset Management, a firm providing alternative investment programs that target exceptional risk-adjusted returns. For more information, visit this website.