The Alternative investment summit happens once per year. Put on by the Opal Group, the world’s leading conference organizer/promoter, the alternative investing summit brings together industry insiders to explore the world of alternative investing strategies. These include, but are not limited to, assets and assets classes typically reserved for high-net-worth individuals and accredited investors. We’ll clue you in on how to profit from them too.
At the Alternative investing summit fund managers and representatives of institutional investment firms will discuss the alternative investing markets and how investors can take advantage of them today.
Why invest in alternatives? To get better diversification and enhance your portfolio return. You can get a jump-start on the crowd by reading this article all the way to its end, and profit from it too.
There are dozens of Alternative investment ETFs to choose from. We list our three (3) choices, along with the top five (5) alternative investments our readers should take advantage of. Remember, if you do what everybody else does you will get what everybody else has. If you want above average return on investment, you will have to go outside the mainstream.
Explore Unique Opportunities At The Alternative Investment Summit 2018
The Cayman Alternative Investing Summit happens once a year, too, bringing together industry professionals from all sectors of the market. They discuss in great detail conditions within the alternative investing world, and how you can take advantage of them. The good news is that, instead of waiting for the investment conference, you can read our article and start profiting from alternative investment strategies right now.
What are alternative investing markets? They are markets, asset classes, and assets outside of mainstream investing. They include just about every type of investment that is not a stock, bond or cash such as commodities (gold, oil, pork bellies, corn), real estate, private equity (direct investment in small or start-up business), managed futures and derivatives contracts(options). What are alternative investment companies? Any company engaged in the business-of or investment-in alternative markets.
The reasons why alternative investments are so attractive is the return on investment (ROI) and diversification away from stocks and bonds. Return on investment is far superior with alternative investments and diversification is almost always a good thing for your portfolio. The trick is finding the right investment for you, the one to match your portfolio and your needs, and that is where our list will help. We break down our top three picks for alternative investment ETFs and then give our list of five alternative investments we think our readers should be buying.
What Are Alternative Investment Funds
In most cases, alternative investments are limited to high-net-worth and accredited investors (have at least $1 million of investable assets) because they carry above-average risk, risk the average investors account is not prepared to take on. Stocks, bonds, and cash are all regulated and protected by federally funded programs; investors in alternative markets are often left out in the cold when a poorly chosen investment goes bust. Along with that, investors in alternative markets face high minimum investment thresholds and high fee structures. Fortunately, these markets can be accessed by average investors, you and me, in some ways, one being the exchange-traded fund or ETF.
Alternative Investment ETF’s are passively managed investment funds that trade on the open market just like stock. They come with some advantages over direct investment in alternative strategies including limiting risk and lower fees, but they are not perfect. There are still fees to consider. Usually, less than 1% and the ETFs tend to lag their underlying market, so returns are not as great.
The Top Alternative Investment ETFs For Your Portfolio
#1 Aggressive Income Is A Good Strategy For Your Portfolio
The PowerShares S&P 500 Buy/Write Portfolio ETF (PBP) – The PowerShares S&P 500 Buy/Write Portfolio ETF is an alternative investment ETF with several things going for it. Number one is its dividend, well over 5% with shares trading at $21. Another is the fact all portfolio investments are based on S&P 500 companies which provides a bit of safety over a fund focused on less established businesses. It, the PBP, is an income-focused fund utilizing the covered call options strategy.
For those less familiar with options and covered calls this is a relatively safe strategy that levers an underlying equity position (stock) by selling an offsetting options position (the covered call). The fund makes money in two ways. The first and optimum way is for each covered call to expire In The Money, ITM. This means the fund would sell the stock for a small profit, usually a month or less after purchase, with the additional bonus of the option premium, the amount of money received for selling the option.
The second way the fund makes money is for the covered call to expire Out of the Money, OTM. When this happens, the fund will get to keep the underlying stock and the option premium allowing it to sell the stock and recoup the initial investment or sell another covered call for a second month’s premium. This strategy allows the fund a constant stream of income with only the risk of lost capital should a stock not perform as expected.
#2 Why Every Portfolio Needs Alternative Investment ETFs
The YieldShares High Income ETF (YYY) – The name, YieldShares High Income ETF, say it all. This is an alternative investment ETF focused on high income. It yields a whopping 8.5% with shares trading near $18.50 and is a must-have in our income portfolio. The YYY is indexed to the ISE High Income Index, an index of the top 30 hedge funds ranked by the ISE. The ISE, the International Securities Exchange, is a wholly owned subsidiary of the NASDAQ and the world’s first fully electronic options exchange. It ranks closed-end funds for the ISE High Income Index (similar to mutual funds only better) based on three things; yield, its discount to net asset value (a measure of value) and liquidity (a measure of demand). The top three criteria we look for in a closed-end fund too.
Closed-end funds are like mutual funds in that they are actively managed investment funds. They differ in that fees are far lower, returns are much higher, and the shares trade like a stock on the open market. They are intended to do one of three things, deliver capital appreciation by investing in undervalued businesses, deliver income through dividends or interest, or a combination of the two. This portfolio companies in this fund are focused on income and deliver it by investing in income-producing assets including equities (about 25%) and bonds (about 75%) with no bias toward business segment or type other than
#3 This Alternative Investment ETFs Outlook Is Golden
The VanEck Gold Miners ETF (GDX) – The VanEck Gold Miners ETF is an alternative investment in a single commodity and the businesses that produce it; gold. It is our number three pick for three reasons; diversity, inflation protection and hedging for our equities portfolio. The fund is invested in 50 of the world’s leading publicly traded gold mines and delivers a dividend near 0.80% with prices near $21.
Now, we realize this is not a high yielder, but the yield is just icing the cake. The real value in this holding is two-fold; income is guaranteed(they dig it out of the ground), and the fund is trading at the bottom of a long-term trading range providing an attractive entry for savvy investors seeking diversification and bear-market protection. The idea is that when the broad market crashes safe-haven investments like gold will gain favor so now, while prices are so low, is an opportune time to buy.
The Best Alternative Investments For Your Portfolio
#1 – Real Assets – Real assets is a seldom talked about asset class that savvy investors have begun to turn to. It comprises tangibles like real estate, commodities, infrastructure and natural resources. These assets can be invested in individually or through ETFs and closed-end funds like Brookfield’s Real Assets Income Fund (RA).
The Real Assets Income fund is a high-income focused fund investing in real assets equities and securities (bonds) issued by real assets companies. It yields an attractive 10.75% with shares trading near $22.50 and trades at an 8% discount to its NAV, net asset value, offering a great value for investors.
The only concern is that a portion of the distribution is ROC, return of capital, but that concern is minimal. Return of capital means the fund’s distribution is not fully covered by income but, at the current rate of return, would take more than 44 years to deplete the fund’s resources and not considered much of a risk at all.
#2 – #3 Real Estate and REITs – Investors looking for a more targeted approach to real assets and, in particular, real estate, should look toward the REITs. REITs, real estate investment trusts, are similar to a closed-end fund or ETF in that they are traded like a stock on the open market, the difference is that they invest in the private real estate market, an alternative investment market long known to produce double-digit returns for its investors.
REITs like Welltower and Apple Hospitality REIT are both positioned well to take advantage of conditions within their respective market; we cover it in full detail in our article REITs, Playing Landlord Never Paid So Well. Welltower is a healthcare-focused REIT targeting the high-growth senior and long-term care facilities, outpatient clinics, and post-acute rehabilitation facilities. Apple Hospitality REIT owns and operates hotels and casinos, primarily in North America, under the Hilton and Marriott brands. They each pay a dividend near 6.5% at today’s prices, near $18 for Apple Hospitality REIT and $55 for Welltower) and fit well into any high yield income portfolio.
Fundrise is another excellent choice for those looking at alternative investments and real estate. It is a crowdfunded REIT not listed on the public exchanges. It allows investors to pool money to invest in private market real estate around the world. The return on investment is far better than what you will get with a traditional REIT and the access to market far easier than traditional real estate investing which makes it a win-win in our opinion. The only downside is that the investment is illiquid, you will need to hold it until maturity (when the real estate is sold) which is typically 4-6 years. We give more color on this investment in our article, Fundrise VS REITs, A Revolutionary Investment You Cannot Afford To Miss.
#4 Marijuana – Marijuana is a multibillion-dollar industry in the US alone and is expected to grow by several hundred percents over the next decade. The growth of the industry will be driven by widening social acceptance and legalization, a process that has already claimed more than half the contiguous US. The opportunity for investors here is simple, the industry is young, on shaky ground (legalization is not Federally mandated) and one of the worst Sin Stocks sectors making it very risky (national legalization may fail) and very inexpensive (most investors don’t want to buy them).
Our pick in this space is Canna Royalty. This company is operated by a team of industry professionals with experience in pharmacy, corporate finance, and marijuana. It is engaged in the business of investing in, development of, branding and marketing of cannabis and cannabis-related products. It has seen astronomical growth, up 470% YoY in the calendar 4th quarter of 2017, and is expected to continue delivering returns of this nature as legalization and cannabis use spreads worldwide.
#5 Cryptocurrency/Bitcoin – Cryptocurrency is the fastest growing asset class on the planet, not because it will replace money but because the technology behind it (blockchain) is so powerful. Blockchain is distributed ledger technology, technology with so many applications to modern finance it will alter the very fabric of our financial system. Investing in cryptocurrency is a bit tricky if you want to own the currencies themselves, but there are alternatives. The easy way would be to invest in the Bitcoin Investment Trust; an over-the-counter exchange traded fund pegged to the price of Bitcoin.
How To Get Ahead Of The Alternative Investing Summit
There is no question the Alternative Investing Summit is a great place to learn about alternative investments. That doesn’t mean you have to wait for it to begin investing in alternative markets, and you really shouldn’t. These investments offer great returns, are easy to access if know how and provide diversification for your portfolio you can’t get from traditional stocks and bonds. The best news is that, now you’ve read our article, you have a plethora of alternative investment ETFs, closed-end funds and alternatives (no pun intended) to choose from.