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Add non-traditional assets to your investment portfolio

business Updated: Nov 03, 2008 21:04 IST

Investors need to carefully analyse the potions available while completing their investment needs. Especially with regard to alternate assets, because traditional asset classes often move in the same direction.

This will ensure diversification in investors’ portfolio, but they also need to understand that this will not reduce or eliminate the risk that is present in all areas. Some of the asset classes that can play a role in the portfolio of investors as alternate assets include the following, but they need to be considered only when one is familiar with the nature of workings of that particular asset.

Art as investment
There are various areas of art, including paintings and sculptures, where an investor can put his money. This will ensure that the money is going into an area that is not market related and the pricing of such investment takes place in a different manner.

This will ensure that there are different factors impacting investments in the overall portfolio. There can be times when other markets are down, but a different trend is prevailing in the art market. Skills like understanding the nature of art and identifying good artists or selecting a particular theme for investments can go a long way in ensuring success in such investments.

Precious metals
Another area that will find a ready echo among Indian investors is precious metals. This can include gold, silver and other precious metals.

Investors who put their money in this area are prone to risks present in the commodities market. There can be sharp movement of prices on either side, but there is an additional factor in this area — there is some value because of the shortage and usage of these metals.

This is another area that offers good opportunity, and that is investing in collectibles. In this area, the value of collectibles will determine the kind of returns.

This is one of biggest growing markets across the world and there are rapid developments taking place in this area.

Collectibles can include anything from stamps to coins and antiques and while most people seem to have a collection, only those with proper knowledge of the working of these areas should look at it seriously. There are different kinds of risks present and they include liquidity risk and even proving the genuineness of an item. This kind of investment is useful for high net worth individual investors in diversifying their portfolio.