The Case for Alternative Investments
Alternative investments are investments other than traditional investments like publicly traded stocks, bonds, money markets or cash.
Historically, alternative investments had been restricted to institutional investors and the exceptionally wealthy, with the intention of generating positive returns regardless of the state of the market. At Westbridge Capital, we believe these investment opportunities should not be limited only to institutional investors and very wealthy individuals.
Alternative investments have great appeal for two primary reasons, they allow for:
- Real Portfolio Diversification: Unlike publicly traded equity, which can trade in a highly correlated fashion regardless of geography or industry as was demonstrated so tragically in the last quarter of 2008, private debt and equity investments tend to trade based on their underlying fundamentals or intrinsic value. This allows for real portfolio diversification and the reduction of portfolio risk.
- Low Volatility Investing: The value of private investments does not tend to fluctuate wildly like publicly traded investments are prone to do. Their values are not determined daily based on the whims of a willing buyer and a willing (or forced) seller, but rather are a logical extension of the cash flow they generate or their prospects for long term appreciation.