Alternative Investments

• Commodities

  Commodity markets are energy, precious metals, or agricultural

  Precious Metals: Gold, silver, platinum, palladium

  Base Metals: Copper, aluminium, zinc, lead, nickel, and tin
• Commodity Investing

  Ways to invest:

  • Direct investment
  • Indirect investment

  Funds/CTA

  Companies whose business is closely related to commodities

  • Commodity derivatives
  • Indexes
• Commodity Indices

  • The primary Refinitiv / CoreCommodity CRB index: The weighted average of 19 categories of commodity
  • This index trades on Intercontinental Exchange futures
• Commodity Indices

  • S&P Dow Jones Commodity Index: production weighted global index
  • Bloomberg Commodity Index: based on trading activity of individual commodities and worldwide production data
  • Rogers international commodity Index: Global commodity futures index
• Cryptocurrencies

  Encryption technology controls issuance / records ownership and payments of crypto

  • Digital wallets
  • Low correlation to traditional asset classes
  • Considered high risk
• Risks to crypto

  • Volatility
  • Decentralised
  • Unregulated
  • Not reserve-backed like fiat currencies
  • Scalability
  • Susceptible to human error, and hacking
  • Potential lack of transparency
• Commercial Property


  Long leases

  Tenant liable for upkeep

  Return dominated by rental income

  High capital value
• Residential Property

  • Shorter leases
  • Landlord liable for repairs
  • Return dominated by capital growth
  • Relatively low capital value
• Property Derivatives

  • Investment Property Databank (MSCI)
  • Property Income Certificates
  • Quarterly returns based on IPD's all-property total return, and a payment reflecting index movements on maturity
• IPD Index Swaps

  OTC transaction swapping SONIA plus a margin for property returns
• IPD Property Futures

  Investment Property Databank (IPD)

  Traded on EUREX (a quarterly or annual total return indices)
• Routes to Indirect Property Investment

  Real Estate Investment Trusts (REITS)

  • UK Closed end company listed on a UK stock exchange
  • No investor can own more than 10% of shares
  • Property letting must comprise 75% of income
  • At least three properties must be owned, and no single property over 40% of total assets
  • At least 90% of profits must be distributed
• Taxation of REITS

  No corporation tax

  Basic rate tax withheld on profit distributions