Non-Traditional Investments

Real estate investments should be considered. These include public real estate companies (many are “real estate investment trusts”, called “REITs” for short), real estate funds, and buying properties directly.

Direct lending is an alternative to bonds. Usually this is done by investing in a “business development company” (“BDC”). These investments can be attractive in a rising interest rate environment, but expenses have to be taken into consideration as they can be substantial. In addition, some of the more attractive direct lending options are restricted to investors with larger portfolios.

Commodity exposure can be attractive as a way to protect a portfolio against inflation. Gold is also considered a “safe haven” that will increase in value in times of macroeconomic stress or geopolitical conflict. For these types of commodities, one can invest in the commodities (usually through a fund or ETF which uses futures contracts to create the exposure) or in a company that extracts or produces the commodity.

Private equity firms buy companies to try and increase their profitability. These firms employ a variety of strategies including identifying potential buyouts and smaller companies with growth potential. Venture capital is specifically focused on investing in start-up companies (although these companies may remain private until they are very large).