Navigating the risks and rewards of alternative investments for family offices

As the global economy becomes increasingly complex and unpredictable, more and more high-net-worth families are turning to non-traditional investments in search of higher returns and greater diversification. From private equity and venture capital to real estate and cryptocurrency, alternative investments offer the potential for significant upside and the ability to hedge against market volatility. With the right guidance and a willingness to take calculated risks, family offices stand to benefit from the opportunities presented by the alternative investment landscape.
alternative investments for family offices

What you need to know

  • In uncertain economic times, family offices are turning to alternative investments, such as private equity, venture capital, real estate, and collectables, to diversify their portfolios, preserve their wealth, and generate higher returns.
  • While alternative investments provide benefits like long-term horizons, investment control, and impact investing, they also carry risks such as illiquidity, lack of transparency, regulatory complexity, and concentration risk.
  • Family offices can approach alternative investments by developing a strategy that aligns with their goals and risk tolerance, working with experienced professionals, and carefully considering investment structure, due diligence, risk management, and regulatory compliance. By understanding the potential rewards and risks, family offices can make informed decisions to meet their investment objectives.
Investments Updated on January 16, 2024

Weathering a downturn in the economy requires doing things a little bit differently. When what used to work no longer gets the same results, it’s time to look for alternatives.

Alternative investments are garnering a lot of attention lately. Whether it be art collection, cryptocurrencies or venture capital, family offices investing in alternative asset classes are searching for diversifiers and exploring new ways to preserve their investment portfolios.

This article defines what alternative investments mean for family offices. It discusses the benefits and risks, and suggests an appropriate approach for family offices venturing into alternative investments.

What are alternative investments for family offices

Alternative investments are investments that fall outside of traditionally traded stocks, bonds and cash. As they are not usually correlated with the general financial markets, investors often use them to hedge or preserve capital during market downturns.

In addition, alternative investments provide access to a much broader range of assets. Examples include private equity, hedge funds, real estate investments, commodities, venture capital, and art or collectables.

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