The Growth in Alternative Investments
An alternative investment is an asset that is not one of the conventional investment types, such as bonds or stocks. Alternative investments could include private equity, real estate and hedge funds. These types of investment have grown in popularity in the last few years. The movement towards alternative investments has been global with companies such as Goldman Sachs investing over $150 billion in alternative assets. Let us explore the trend further, in order to understand why the movement is growing.
The worldwide movement towards alternative investment grew significantly in 2016 as more investors moved towards property, infrastructure, private equity and so on and so forth. One reason for the growth in alternative investment is the implementation of asset purchasing programmes in response to the financial crisis of 2007-08 . These programmes have allowed strong gains across many private equity markets and traded bonds. As a result of this, large investors have become more attracted towards alternative assets. Many large firms have become increasingly interested in the movement: statistics show that companies such as Blackstone and JP Morgan spend $302 billion and $185 billion on alternative investment deals.
There are fears, however, that the large increase in alternative investment will leave investors disappointed in the future. This is because the increase in alternative investment has caused an increase in valuation of illiquid assets which are known for their substantial loss of value when being sold. Only time will tell whether such fears are well-grounded.