Alternative Investments Must be More Liquid and Transparent

Alternative investments, which are primarily used to diversify a portfolio and beat rising inflation, need to establish a new, more liquid and transparent way forward, to recover from damage done to the sector during the global financial crisis (GFC). Among advisers and asset managers around the globe, this has been a growing appetite for alternative investments and thus are attempting to introduce new methods in order to make this possible. The reason for this is because the global focus has been shifted to alternatives for healthy returns and minimum risk. In fact, the rate of growth in the alternatives sector globally is approximately seven times that of traditional asset classes.

What is causing the sharp rise in the popularity of alternative investments? Most analysts agree that the steadily increasing interest in alternative markets is being driven by steady improvements in the structure of these nontraditional investment offerings. Although alternatives have been growing dramatically in popularity and demand since 2008, and are widely regarded as more viable than traditional investments, advisers and asset managers around the world have openly stated that alternatives must continue to become more liquid, transparent and cost-effective; if they hope to remain appealing to the international investment community.

Now that alternative investment offerings have found their place in a growing number of portfolios, the focus for investors has shifted to liquidity, transparency and cost concerns. Although alternative investments delivered on their promises during the technology crash in the early 2000's, the industry was smaller then. Since that time, the popularity of alternative investment offerings have been growing incredibly fast and have become a big part of the market, in a very short period of time. Because of this, in some instances, maintaining liquidity and transparency has become difficult for many alternative investments and a growing concern for investors. Albeit a challenge for some providers, the industry's ongoing commitment to diversifying risk has prompted many alternatives to address these challenges and make meaningful changes that will greatly improve their appeal and thus, are expected to continue attracting investors.