In the dynamic landscape of high-net-worth (HNW) investing, a notable trend has emerged: the growing integration of alternative investments into portfolios. Praemium’s recent research with CoreData into how investors and advisers are using alternatives, sheds light on the profound implications of this shift, revealing a correlation between alternative investments, heightened engagement, and strengthened adviser-client relationships.

Over the last few years HNW investors have been the drivers of a significant increase in the allocation to alternative investments, with over 17% embracing the asset class. And with the world’s wealthiest investors increasingly aligning their portfolio allocation with that of endowment strategies, it’s a trend projected to continue.

The allure of alternative investments lies in their diverse range of opportunities beyond conventional assets like stocks and bonds. Assets such as private equity, hedge funds, real estate, and commodities offer unique risk-return profiles, serving as effective diversifiers against market volatility and offering the potential for attractive risk-adjusted returns.