When it comes to investment, plenty of focus is paid to the purchase of stocks, bonds, and other securities. While these investment types have performed well historically, there are numerous other types of investments that can also provide overall value to an organization’s financial portfolio. These are often referred to as alternative assets. To dive deeper into the benefits afforded by these types of assets, we turn to the example set by Kuwaiti European Holding.The well-known holding group maintains a range of investments that includes real estate, entertainment projects, tourist attractions, and more. Read on for a look at how these types of assets can benefit both organizations and individual investors.
Before we dive into work by Kuwaiti European Holding, let’s first discuss what is perhaps the most fundamental question on this subject — what is an alternative asset? An alternative asset is typically considered to be any value-generating asset that exists outside the common investment spaces of securities, cash, and fixed income. In contrast to many traditional investments, these types of assets may require investors to tie up their capital for an extended period of time. This can be the case when an investment exhibits a slow rate of maturation or also when an investment is less liquid and may require a long selling process before its holder can fully divest.
Commonly held alternative assets include real estate, commodities, and private debt. Additional assets of this type can also include private equity, venture capital, and even partial or full ownership of a hedge fund. It should be noted, however, that there is practically no limit to what can be considered an alternative asset. For instance, some investors have been known to place some of their funds into collectibles and have even been able to outperform the stock market by doing so.
While that may answer the “what” of alternative assets there still remains the question of why an individual or organization may choose these types of investments. Though answers here can be varied, including a lack of trust in securities markets or a desire to support organizations not offering stock ownership, the typical reason for such a move is diversity. By investing in alternative assets, organizations and individuals can work to reduce the volatility of their portfolio holdings and hope to stay afloat financially even if the stock market takes a turn for the worst.
Since alternative assets are, by their nature, sometimes outside the mainstream investing world, it can require a discerning mind to source quality opportunities. One of the ways this can be done is by looking to an area in which an individual already has existing expertise. For example, if an individual is an avid collector of sports cards, this may be an area where that person may want to look for investment opportunities. By leveraging their understanding of the space, they may be able to hold an edge on those who are novices in the field.
This thought process is indicative of how Kuwaiti European Holding sources its own investments. Often these investments are in the real estate sector, an area in which the company has an existing foundation of expertise. By looking to opportunities in this area the company is able to apply that expertise to its value assessment of investment properties. This has helped discover prime opportunities that have bolstered its financial portfolio and allowed it to further diversify its holdings.
While the ability to seek out existing opportunities as outlined above can be a powerful driver of value, it can also be important for an organization or individual to be skilled in creating opportunities as well. One way this can come about is when an existing opportunity holds the potential for development that can help it transition from a moderate store of value to an instance that may sustainability generate increased value into the future. Though difficult to achieve, when accomplished, such a situation can become a huge difference-maker for even the most robust financial portfolios.
In the case of Kuwaiti European Holding, we can see this manifest through the development of real estate opportunities beyond their existing value. For instance, the company has made waves recently for the development of a new themed resort to be located in London. While the resort is planned for a piece of property that would have already been considered a valuable investment for any financial portfolio, the ongoing development of the property seems likely to increase that value many times over. This increase in value is being accomplished through the company’s existing expertise in real estate and property development, as well as its related expertise in entertainment and in the tourism industry.
The above overview may provoke the question as to whether or not an individual or organization may want to invest in alternative assets. The answer is — it depends. The decision to invest in these assets should not be taken lightly and should instead only be arrived at after an in-depth investigatory process. This process would do well to incorporate some of the pros of these assets, such as their ability to diversify and produce large stores of value, as well as their cons, such as their possible lack of liquidity and their potential volatility. Only after an investor has carefully weighed the full range of pros and cons should the decision on whether to invest be made.
Regardless of whether or not one invests in alternative assets, it’s important for anyone maintaining a financial portfolio to at least be aware of some of their finer points. The above overview can act as a first introduction to this world. By detailing some of the types of assets available, as well as the strategies employed by Kuwaiti European Holding and other investors, this overview can provide a foundation of knowledge in this space. Consider continuing to develop this knowledge with additional articles, books, videos, and other materials on this subject. Such a pursuit can not only be informative, but it may also help to one day provide a source of new value for investors of many different sizes.
As always, it is important to do your own research before investing in anything.
