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India is well-known for diverse culture as well as weather. We witness majorly four seasons in a calendar year when it starts with winter, followed by summer, monsoon, and post monsoon. How would you plan for the rainy season? Buy an umbrella, water-proof footwear, and good coverings for your electronic devices, or would you also look for some alternatives? Similarly, the same can be said for both the winter and summer seasons, respectively.
The Indian climate has something to offer for everyone. Diverse weather conditions can be beneficial in various ways. People tend to enjoy every weather, many crops can be produced depending on the weather, a great destination for tourist attraction, good for economic growth, and many others.
Diversification helps in growth and mitigating the risk. You must have heard the phrase, ‘Don’t put all your eggs in one basket.’ While in investment, when you keep money for future needs or emergencies, it is crucial to focus on investment opportunities that can yield attractive returns.
How alternative investment funds diversify your portfolio, lower volatility and enhance returns?
Since alternative investment funds frequently behave differently from conventional equity and bond investments, including them in a portfolio may help to reduce volatility, provide greater diversification, and boost returns.
- Lower volatility
The alternative investment funds may potentially lower the overall risk of a portfolio because they rely less on general market trends and more on the strength of each individual investment.
- Diversification
Alternatives investment funds can be a significant way to diversify your portfolio with low correlation to traditional asset classes.
- Boost returns
Alternatives give investors access to a wider range of investments and investment strategies, which can improve a portfolio’s risk and return profile and increase total return.
Why are Alternative Investment Funds getting popular in India?
Asset managers invest in unlisted companies or private equity situations, which are essentially growth capital for businesses that aren’t quite ready to enter the public markets, through alternative investment funds. While a significant portion of their capital is already invested in the listed market, it gives them the chance to diversify their portfolio while also giving investors the chance to invest in the private market through these kinds of products.
There are many opportunities in alternative investment funds which includes investing in farmlands, agricultural products, artworks, etc. In the coming times, people will get an opportunity to consume products/services and invest and earn from what they use in their everyday lives.
Conclusion
Alternative Investment Funds can be a good option for investors whose risk appetite is high and who are willing to receive high returns over a period of time. Prior to making any investments in Alternative Investment Funds (AIFs), it is highly recommended to engage in comprehensive market research. By doing so, investors can make informed decisions and strategically allocate their funds with the objective of attaining their financial goals.
