Today’s global markets are very complex, and most often controlled by ‘emotion‘, and ‘hype‘!
Your investment plan could be entirely in the hands of a volatile stock market at record highs, and you could have little control over who manages your money. We believe it is important to take charge of your portfolio. Now could be a great time to look at crystallizing some gains and diversifying your portfolio into alternative assets.
But what are alternative assets, and how do you diversify your portfolio to include them?
What many advisers will not tell you is these investments are available to you, and offer predictable returns and real ownership of the assets themselves. Doesn’t it make sense to invest in things you can see, feel and touch? This could be the best kept secret that your adviser does not want you to know about!
- Fixed Income
Fixed-Income investments typically will be offered through either private equity ‘bonds‘, or ‘debentures‘. These debt-instruments usually provide immediate cash flow to a portfolio, without the volatility of the stock market you would typically find in a mutual fund. While the investments within the fixed-income section of your portfolio can vary, the underlying concept does not change. A non-cyclical investment in an underlying asset that produces predictable cash flow without the fluctuation of the markets. There are many different types of fixed-income investments you can add to this asset class, which adds to the excitement of creating a brand new portfolio.
- Real Estate
Many people will look to real estate to diversify their portfolio. The reality for most is – the cost of adding this strategy to your investment portfolio is high, the risks and the length of time required to realize the growth opportunity can be significant, especially with the record highs in the Canadian housing market. Now, you can use your money to “pool” together with other private or institutional investors in private offerings of Real Estate, Real Estate Investment Trusts (REIT), Infrastructure, or Fixed Rate Mortgages (sometimes referred to as a Mortgage Investment Corporation (MIC). Many of these investments are spread out not only in Canada, but in the United States. This diversification strategy gives you ultimate exposure to different markets. Often, these are cash flowing or income producing investments that offer upside growth potential, physical ownership of the underlying assets, and stable, predictable returns.
- Commodities
A well diversified portfolio should typically have some form of exposure to commodities such as oil and gas. Traditionally, if an investor wanted to diversify their portfolio they were purchasing shares in an oil and gas company, or perhaps an exchange traded fund (ETF) which followed the particular commodities index. While this can offer you exposure to the commodity itself, the unfortunate truth it is still follows the volatile pattern of the stock market, guided by the underlying stocks.
We believe in a portfolio of real asset based commodity investments. This allows an investor to ‘hedge‘ against the rising costs of oil and gas by actually owning a share of the producing asset. Typically, these investments will allow direct ownership in already producing wells acquired below market cost, which are actively producing oil and gas assets.
- Land
Land investments can allow an investor to add real physical ownership of raw land within their portfolios. This land is typically acquired for a discount to their market value, and in an area which will at some point be re-zoned from agricultural use, and developed into commercial or residential use. This strategy may be referred to as investing in the path of development. As the world grows and experiences a larger influx of people from rural areas to urban areas, the demand for land will increase dramatically in the short and long term.
These land based investments can be localized, or spread out across different regions of Canada and The United States.
