First of all, it is important to note that alternative assets refer to financial and/or real assets other than traditional ones (stocks and bonds). Alternative assets include investments in real estate, infrastructure, private debt, and private equity. Traditional assets are characterized by volatile returns, high liquidity, and a highly developed market. In contrast, alternative assets are characterized by a developing market, with the potential for higher returns, low correlation with other markets, and a lower degree of liquidity.

BlackRock, one of the world's largest alternative investment managers, points out that investing in these types of assets—which tend to behave differently from conventional investments—can offer the following benefits:

• Greater diversification: Because they have a low correlation with traditional asset classes, alternative investments are an excellent way to diversify portfolios and reduce volatility.
• Increased returns: They can improve a portfolio’s risk/return profile and total return by providing access to a broader range of investments and strategies.

• Generating Income: They can offer consistently higher returns than traditional investments, especially during volatile periods.

What has been described above is particularly interesting in the turbulent times we are living through—times that have persisted since the social crisis of October 2019 and were subsequently exacerbated by the pandemic in 2020. The volatility seen in Chile’s stock market indices during the periods mentioned—and how it is expected to continue given the results of last Sunday’s election (the IPSA fell 9.33% on Monday), poses a risk to investors’ assets. This is where alternative assets emerge as a resilient opportunity, with low correlation to these shocks and offering high diversification for their portfolios.

In a study conducted by Preqin, one of the leading alternative asset platforms, which surveyed more than 500 institutional investors of various sizes, manager types, and locations, the results showed that the returns on various types of alternative assets met or exceeded expectations in 2020, demonstrating strong resilience and adaptability during the difficult times caused by the pandemic. Figure 1 shows that the main reasons cited center on diversification and the reliable returns provided by the various asset classes.

Based on the foregoing, we believe that despite the difficult times we have faced—and which are expected to continue for some time—a good opportunity to invest in a diversified manner, with low correlation, lower risk, and reliable returns, is to invest in alternative assets, always taking the manager’s experience into account and carefully selecting investment funds. At FYNSA AGF, we offer options for investing in private debt, infrastructure, and real estate assets. We invite you to review our investment proposals, and if you have any questions, please contact us so we can provide you with more detailed information.

Figure 1: