Alternative investment offers smart investors an alternative diversifying strategy for both shares and fixed income across various asset classes. When selecting the right mix in your portfolio it is crucial to consider your time to retirement, tolerance for risk, and expected investment returns, investing across borders can also broaden your investment options, however be cautious. 

In the current low interest rate environment, high-net-worth or professional investors can continue to diversify across a wide range of alternative investments such as high-yield SME Bonds, domestic and international shares, direct and indirect property investment. Unlisted public company Issuers offer a higher return to compensate investors for their ill-liquid SME Bonds, and with some offers. Alternative Investment Bonds can be converted to equity, or include a profit distribution at maturity.

What do unlisted public company Alternative Investments offer?

  • Income – offer the highest and most reliable fixed income streams
  • Diversification – for better risk adjusted returns and across opportunistic asset classes
  • Protection of principal – debt ranks higher than shares and Bonds can be secured against assets

Alternative Investment SME Bonds are unlisted Corporate Bonds

SMSF’s are a huge potential investor pool for SME Bonds. The Alternative investment Bonds are open to sophisticated investors with assets in excess of $2.5 million or annual income of over $250,000, with a minimum investment is $100,000, and other professional funds investing in the private sector. Terms range from 12 months to 3 years. Paying a fixed income usually monthly in arrears until maturity. Coupon rates start from 8% to 15% and in some cases the Bond can be converted to equity.

Since the GFC, small to medium business have embraced the emerging AltFI industry as alternative investment to bank financing. Since 2010, Germany addressed this problem by creating five stock exchange special Bond platforms to serve the SME Bond market to raise debt capital. A report by Michael Oppermann, Partner, Head of Financial Accounting and Advisory Services, Ernst and Young, explains ‘Corporate Financing via Bonds for SMEs’ is the solution to Solvency II and BASEL III, and it’s decreasing exposure to financing small business globally.

SME Bonds capital raising

 

Alternative Investment the right mix

The 2017 Russell Investment/ASX Long-term Investing Report underscores the danger of Australian investors relying on local asset classes, and traditional ‘do-it-yourself’ approaches, to achieve their long-term investment goals. 

alternative investment asset class comparison 2006-2016.jpg

“The report’s findings show why more savvy investors are considering diversified multi-asset strategies—designed to efficiently capture new sources of return opportunities—to help build their long-term wealth,” said Pete Gunning, chief executive, Asia-Pacific, Russell Investments. “These performance trends of key asset classes, particularly when combined with our strategists’ view that many markets globally are overvalued, should give investors ample reason to revisit their retirement portfolio exposures.”

 

Relying on a single asset class to carry a portfolio can result in heavy losses when that market falls, especially when time is not on your side, and you cannot wait to recover your investment. Consider making a wide range of alternative investments such as high-yield bonds, domestic and international shares and direct and indirect property investment.

Accrutus Capital facilitates alternative capital and alternative investments for Australian companies and opportunities for SMSF and professional investors.

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

Share This