I created Asset Tribe because I want to make it much easier for qualifying investors to invest in alternative assets.
Over the last 20 years institutional weightings to alternative assets have soared. What used to be a tiny allocation for pensions and endowments can now be as high as 50% and an average of around 20-25%.
This is not the same story for most individual investors. Most investors have very little allocation to alternatives at all.
Investors continue to take more interest and a more active role in managing their own money but have been largely excluded from Alternative Assets.
Crowdfunding has given investors access to individual start up companies but this is a very high risk category unless investors methodically diversify their investments. Despite the tax breaks that attract investors, most of these companies will fail and only a few will still be around after 5 years.
More recently, platforms have allowed qualifying investors access to Private Equity funds. Investing in an alternative asset fund carries risk but less risk than investing in a single early stage company. However these funds are complex and can be difficult for many investors to understand, even the most sophisticated.
I think it is important that investors diversify their assets but also understand and engage with them. If you understand what you are investing in then I believe you manage your risks better and if you manage your risks better then you should perform better.
Alternatives is a very diverse asset class with some really interesting categories that investors can engage with and understand. Unlike Private Equity which has a very high correlation with traditional public equities, assets such as fine wine and art have very correlations (below 0.5).
Investing in uncorrelated assets brings huge benefits to a well balanced portfolio. We have seen very recently the demise of the traditional 60:40 portfolio (60% equities and 40% bonds). For decades this has been the preferred balanced portfolio of many investors. However, we have seen in 2022 that bonds and equities have moved together as inflation has become a big issue for both of these traditional markets.
Not only do many alternatives have low correlations to traditional stocks and bonds, many are in real tangible assets which can also help protect against inflation.
Alternative assets have historically outpaced equity markets but they come with higher risks and are not for all investors but there is still huge market for these assets with sophisticated investors who, by and large, have little or no allocation to alternatives currently.
High on the list of risks for these alternative assets is their low liquidity. Funds are often 10+ years and even longer for those investing in infrastructure. For many of the other assets there is not a well functioning market to provide investors with quick access to their capital should they need it.
Whilst currently in its infancy we think that digital assets offer a future solution to this liquidity problem. Tokenisation produces digital representations of stakes in assets (shares or cashflows) and brings easy transferability and settlement which can help facilitate their liquidity. I’m looking forward to tokenisation opening the way to a faster and more accessible secondary market in alternative investment in the future..
Access and collaboration
Access is a big problem for many investors.
Often, High Net Worth Investors do not even see potential investment opportunities in alternative assets. Investments can have very high investment thresholds putting them beyond the sensible means of many qualifying investors. As an example, one qualifying criteria for many investments is having investable wealth over EUR500,000. A sensible allocation to alternatives might be 20%. This would mean around EUR100,000 for someone just on that threshold.Many alternative investments have thresholds well above that and many at that level. That would mean just picking one investment as the entire alternatives allocation.
I don’t think that such a concentrated allocation to alternative assets is a good idea. Diversification ia a great way to manage risks.
Even those investors who overcome these obstacles will rarely get access to adequate information to make an informed decision. We want to give investors the information they require and give them access to the managers and experts they need both when making their investment and on an ongoing basis.
Collaboration is essential because it gives everyone, including our customers, a voice in how the market operates. AssetTribe is all about listening to the tribe and making sure we bring assets that they are interested in.
A growing community
I’ve been working on Asset Tribe for a long time, because I believe in the value of diversification and the potential of today’s digital technologies. I’m excited to have launched a platform that embodies so much of what’s important to me and which is bringing like-minded investors together.
Asset Tribe is here to help you engage with real-world assets across various industries to diversify your portfolio in order to improve returns and better secure your capital.
One of my motivations for establishing AssetTribe is to make the new world of investment accessible to more people.
Through access and collaboration AssetTribe helps like-minded investors operate in these markets more comfortably. AssetTribe helps give you a better appreciation of the assets and the risk.
It’s exciting to be at the forefront of the new markets and I look forward to you becoming a part of the growing band that is AssetTribe.
Jeremy Davies, founder of AssetTribe.
