Financial expert urges investors to consider non-traditional asset classes

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An investment expert has called for more consumers to consider non-traditional asset classes as rising rates make it harder to save and stock market volatility continues.

Nigel Green, group chief executive of deVere, said now is a good time for investors to consider diversifying into less traditional asset classes.

He noted that Wall Street’s three major indexes are seeing their worst streak of losses in decades, and it’s reverberating around the world.

“This comes amid investor concerns over inflation, forcing central banks to break pauses in their economies, the ongoing war in Ukraine, Covid lockdowns in China’s manufacturing heartlands known as” factory in the world,” and some well-known companies posting weak results,” Green added.

“This backdrop creates an environment of lack of returns for investors.”

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Earlier this month, UK inflation hit a 40-year high of 9.1%, and Bank of England Governor Andrew Bailey warned that inflation would rise further, increasing the risk of another recession.

This has caused many investors to wonder how to protect their money from interest rate risk and the eroding effect of inflation.

“For those seeking both capital appreciation and preservation, now is the time to consider diversifying into less traditional, yield-enhancing asset classes,” Green said.

“These could include venture capital, structured products, cryptocurrencies, high dividend stocks, hedge funds, managed futures, and direct real estate, among others.

“Such investments could also be useful tools to improve the risk-return characteristics of your investment portfolio. Indeed, they increase diversification and reduce volatility, due to their low correlation with more traditional investments such as stocks and bonds; and they can hedge certain portfolio exposures.

While Green didn’t specifically mention peer-to-peer lending as an alternative to cash savings or equity holdings, P2P lenders have positioned themselves as a viable option. Dozens of P2P platforms are still open to retail investors, and most of them allow lenders to hold their investments in an Innovative Finance ISA (IFISA) tax envelope to maximize returns.

According to exclusive research by News Peer2Peer FinanceIFISAs consistently returned between 7 and 9% per year, on average, between 2018 and 222.

Meanwhile, last month, the average return on an easy-to-access Cash ISA was just 0.38%, according to the latest statistics from Moneyfacts.

“Return-starved investors should explore less traditional opportunities, not only for potentially higher returns, but also because they provide diversification and downside protection for their portfolios,” Green added.

Read more: IFISA: the golden ticket

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