As 2022 begins there’s plenty to be cautious about. Central Banks are starting to tighten monetary policy, energy prices are contributing to rising
2021 being confirmed as the 6th hottest year on record; the last 7 years being the hottest ever recorded.nasa
So, what effect could all these events have on different asset classes? Rising inflation and interest rates can be challenging for
“Alternatives” are a large asset class, traditionally associated with commodities and real estate. But the fundamental quality we look for at Tribe is diversification from the
There’s no ‘one size fits all’ approach available in alternatives and within our investible universe there are opportunities across the risk spectrum which can target different returns, liquidities and yields. As well as traditional sectors like real estate (where we focus on
Some alternatives, for example battery storage facilities, woodland or a basket of micro-loans, aren’t subject to short term economic forces. The biological growth from trees and the value of the timber will still happen if US equities fall. If the price of timber isn’t particularly attractive, trees that would have been harvested can be left in the ground. This is a big part of the appeal in alternatives: they can reduce volatility across a portfolio and can act as a buffer when traditional markets are volatile.
Many investors think inflation could cause markets to stutter in 2022. With some alternatives, however, there can be a degree of insulation given the underlying entities. They can also have higher dividends which, crucially, are index-linked (i.e. linked to inflation). Social housing in the UK is one example. Not only is it relatively well protected given local government pays the rent, these payments are also increased in line with inflation, unlike investing in most bonds, where you receive the same amount of money in real terms.
However, like any
In the current environment, alternatives have become an increasingly important asset class for our portfolios given both their financial and impact driven characteristics. We consider them a good diversifier which can complement a broader portfolio with global equity exposure. Alternatives have the ability to offer total return potential, as well as inflation protection and income characteristics, which in the current market are becoming increasingly harder to find. Given the difficult market conditions for equities and