Alternatives
Despite high interest rates and rising property prices, real estate investors still have several promising opportunities to consider in 2025.
- Experts point to both short- and long-term rentals as reliable income sources, with travel demand and declining homeownership supporting steady occupancy and profitability.
- Distressed, off-market properties are also gaining traction, offering value to investors who can act quickly and renovate effectively.
- Multi-family homes, especially triplexes and fourplexes, are ideal for new investors looking to house hack—living in one unit while renting the others to offset mortgage costs.
Another savvy strategy is converting basements into rentable units, particularly in high-rent cities, where this can generate solid monthly income.
Finsum: In short, even in a tricky housing environment, creativity and timing can open doors to strong real estate returns.
Hedge funds saw mixed results in February as market volatility surged amid trade tariff uncertainties. Fixed-income strategies performed well, benefiting from falling interest rates, while macro and equity hedge funds struggled due to sharp declines in technology stocks.
The HFRI Fund Weighted Composite Index fell 0.47%, with relative value arbitrage and event-driven strategies posting gains that were outweighed by broader declines. Cryptocurrency funds took a significant hit, with the HFR Cryptocurrency Index dropping 16.8% as volatility spiked.
Meanwhile, event-driven funds gained modestly, and fixed-income strategies extended their winning streak, marking another month of positive returns.
Finsum: As hedge funds navigate volatile conditions, their ability to adapt remains key to delivering returns in uncertain markets.
Asia’s hedge fund market is evolving, with diversification beyond long/short equity into multi-strategy and quantitative approaches, particularly in Japan. The adoption of separately managed accounts (SMAs) is rising, offering investors greater customization, risk control, and transparency.
Allocators are increasingly partnering with emerging managers early, securing better terms and gaining specialized market insights. Transparency and authenticity are becoming crucial, as investors seek managers who openly share their strategies, risks, and past performance.
Japan remains a key focus, while sectors like artificial intelligence and semiconductors present new investment opportunities.
Finsum: Despite these trends, raising capital remains challenging for emerging managers, who must establish strong infrastructure and a compelling value proposition to attract investors.
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Sixteen years ago, alternative investments barely featured in most portfolios, aside from a modest allocation to commodities. Options for retail investors were limited, with most alternatives either prohibitively expensive or inaccessible.
Today, portfolios tell a completely different story, with many being dedicated to alternatives like private equity, private credit, and reinsurance, reflecting how the landscape has evolved.
Advances such as interval funds and lower fee structures have opened doors for individual investors to tap into the benefits of these assets, including the sought-after illiquidity premium. Unlike the past, where high fees often negated returns, competitive pricing and improved liquidity have made alternatives a more viable choice.
Finsum: These innovations now allow for greater diversification and the potential to cushion traditional portfolios against market volatility.
With the U.S. presidential election approaching, markets are anticipating potential volatility, and investors are weighing where to allocate their money. While some hedge funds are positioning for “Trump trades,” U.S. Global Investors instead sees growing opportunities in alternative assets like gold and Bitcoin.
Paul Tudor Jones shares this perspective, highlighting these assets as hedges against rising U.S. debt and inflation concerns. The national debt has reached unsustainable levels, doubling its GDP ratio over 25 years, and the federal deficit continues to climb.
As inflation impacts traditional assets, commodities like gold, silver, and Bitcoin have become more attractive as they tend to perform well in inflationary environments.
Finsum: Despite election-related uncertainties, holding alternative assets may help investors maintain portfolio stability in the long run.
While nontraded real estate investment trusts (REITs) have faced another challenging year, financial advisors are seeing a rise in sales of alternative investments overall. By August, financial advisors sold $76.6 billion of illiquid alternatives, including nontraded REITs, business development companies (BDCs), interval funds, and private placements.
This amount matches 2023's total, with projections indicating the industry will surpass $115 billion by the end of 2024. Sales of nontraded REITs have notably decreased to $4.2 billion in the first eight months, compared to their peak of over $33 billion in 2022.
However, BDCs have overtaken REITs as the most popular alternative investment sold, with $23.7 billion in sales through August. Blackstone Inc. leads in nontraded REIT and BDC sales this year.
Finsum: There is still an elevated risk premium built into most non-treasury rates right currently but REITs could see a bounce back with that falling soon.