According to the latest World Wealth Report 2013 by CapGemini & RBC, 10.1% of the total net worth of HNWI is invested in “Alternative Investments”, excluding real estate.
If your investments are some reflection of these global statistics, you will agree that this highly interesting, lucrative asset class requires a different approach and additional skill set than the traditional ones.
In the past several years, I have dedicated my professional time to try to master this growing asset class of “Alternatives”. Even though my education and experience gave me an excellent starting point, I still ran into the following reoccurring challenges:
Where do you find these great, quality, opportunities to invest in? The Internet is full of suggestions and people looking for capital and local pitch events are okay. But mostly it is non-personal, non- exclusive and not always of great quality either. Generally, by the time these opportunities reach the average investor, the better ones are cherry-picked by others and not (widely) available.
Once you have created some consistent deal flow, how do you assess each deal? How can you do this methodically and relatively quick for the 1st screening filter? (Avoid burning all your precious time to review countless deals).
Then, when you have these investments in your portfolio, how do you manage, oversee and continuously re-assess its progress. Grow them?
From my earlier days as professional investment manager, I learned that avoiding the “Black Hole Investments” is more important than picking a winner. This is especially true in the group of alternative assets. Another key element to success is to collaborate with other successful people, to share knowledge, connections and opportunities. Ultimately it’s experience and exposure to high quality deals that made me realize when certain opportunities stand out against others. You need to be able to compare prospective deals over time, with a solid 3 dimensional point of reference.
For many high net worth individuals and families it is hard to find or access focused expertise in the non mainstream assets category, let alone tailored help to their specific situation. In fact, there are very few accredited Family Office Managers in the world… people who are trained and accustomed to managing large scale complicated investment portfolios for families and individuals.
The skill and education necessary to become competent at Alternative Investments goes far beyond a university degree. Time in the trenches and solid deal flow is critical to building the necessary experience.
For more information, search the internet for family office consultants or alternative investment analysts.
Andre Voskuil is known as The Dutch Oracle for his accurate predictions and mentorship of his Inner Circle clients. Find out more about Andre at http://www.DutchOracle.com