Why Global Merces?
“Alternative investments, or private markets, are Australia’s fastest growing asset class and projected to become Australia’s largest asset class by 2021, reflecting global trends.” (Rainmaker Roundup, Sep Quarter 2016).
Historically, alternatives have produced greater risk-adjusted yields and they also present a level of diversification into a portfolio (i.e. they can provide a safeguard to returns when equity markets underperform).
Some alternative investments can experience higher levels of volatility than traditional stocks and bonds (e.g. commodities), but overall, they are not as volatile compared to any other investment. In fact, many alternatives exhibit far less volatility than stock markets, based on the markets they trade in and/or their management styles.
Additionally, because alternatives approach financial markets differently than traditional investments, they can provide returns that exhibit low correlations with more traditional approaches. As such, adding alternatives to a diversified portfolio has the potential to provide lower volatility than a portfolio composed exclusively of traditional stocks and bonds.
Multi-strategy alternative funds may alleviate concentration risks. Investing in only one type of alternative strategy may provide some diversification benefits, but can also concentrate risk exposures.