With all the aforementioned, uncorrelated assets are truly investors’ goldmine. So, which assets could help you in forming this goldmine?
The answer lies in alternatives such as private equity and real estate. Portfolio managers and UHNWIs have increasingly turned to alternative assets for diversification during the past decade. According to EY and KKR research, 81% of those with more than CHF 30 million in net worth invest in alternative assets, allocating a massive part of their portfolios to private equity (27%) and real estate (11%).
The beauty of private equity lies in its illiquidity nature. As it’s not marked-to-market daily – prices are not affected by dramatic changes in market sentiment, potentially rewarding patient, longer-term investors with higher returns, which is particularly significant given the recent trend of increased correlation between stocks and bonds. The traditional 60-40 portfolio has not performed well in this environment.
Real estate has been another popular alternative asset class in recent years due to its stability, tendency to rise, and its positive correlation with inflation.
And for those wishing to invest in real estate, Switzerland is an attractive option due to its limited supply and high demand, which offers another degree of security to this asset class. While rental yields in Switzerland may not be as high as in other countries, the constant growth in demand for homes and the stability of the Swiss franc mark Swiss real estate as a wise investment choice for discerning investors.