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South Africans are constantly bombarded by negative news. Whether it’s the continued pressure resulting from high inflation and multiple repo rate increases over the last year or seeing recurring instances of government own goals, there seems to be less we can rejoice in every day. All against the backdrop of a struggling economy.

Investors have enough to worry about without also having to contemplate how these events will affect their financial futures. Regardless of investment strategy, it often seems as though traditional asset classes like equities simply cannot contend with the barrage of blows delivered by constant market movements, often beating them down to negative or below-inflationary performance levels. 

For some reason, though, these are the same options that are being presented to investors time and again. Despite a waning track record, growing volatility and underperformance, investors seem to constantly find themselves invested in the same pool of traditional assets masquerading as diverse simply because they’re offered by multiple providers. 

But why are more people not questioning the validity and feasibility of investing in the same thing year in and year out? The definition of insanity is doing the same thing over and over, expecting a different result every time. Does this mean that investors have gone insane? 

Or are they simply sheep following each other over a cliff? 

There exists an alternative asset class that is so varied, it makes up the vast majority of available investment options in the market. Compared to the small and dwindling pot of traditional assets, certain alternative assets have a knack for outperforming, especially in volatile markets, due to their counter-cyclical nature. 

And within this asset class lies a subset of assets born out of the growing global sustainable investment trend and perfectly positioned to enjoy significant growth due to their ability to address key issues such as food and energy security. In a country that has sufficient arable land and an economic need that all but guarantees continued progress in this sector, these sustainable assets are poised to deliver competitive returns, consistently. 

But managing these assets requires a specialist approach and a financial services provider with the know-how to structure investments that mitigate against multiple risk factors. 

While there are many providers who claim to offer a diverse range of offerings, most of these products are actually invested in the same underlying assets. Few providers can confidently claim to deliver a product that offers true diversity and competitive returns, a product that capitalises on the growing global awareness of, and interest in, alternative assets while enabling investors to earn market-beating returns.

Even fewer don’t charge fees so exorbitant that investors might actually be better off putting their money under their mattresses. 

But this doesn’t mean that investors should be pulling all of their funds out of equities and other traditional asset classes to invest in alternative assets. That would be irresponsible. 

A balanced portfolio contains a healthy combination of traditional and alternative assets to help smooth out the investment journey. And investors have the power to question whether their portfolios are sufficiently diverse and balanced enough to ride out any storm. They have the power to question whether their portfolios are disregarding the majority of investable assets available to them. Yes, their portfolios might inevitably take a knock from time to time, but that’s better than a full-scale casualty when the markets turn because of a disagreement about whether a foreign president should be allowed to visit. 

It’s time for investors to stop blindly following generic advice and start questioning whether their portfolios are truly working for them.

Available exclusively through financial advisors, the Fedgroup Impact Portfolio combines selected green energy, smart agricultural, and other alternative assets in an endowment structure. This offering brings investors an investment option that provides significant tax benefits as well as the means to hedge investment portfolios against inflation through the strategic combination of counter-cyclical, sustainable assets.

Speak to your financial advisor about diversifying your investment portfolio, today. DM

 

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