Multi-asset: diversification with alternative investments

Multi-asset strategy as with family offices

The super-rich and extremely wealthy do not necessarily understand more about investing and maintaining wealth than a well-informed middle-class citizen. The difference is that so-called high-net-worth individuals have competent and experienced family offices at their side, which use professional investment strategies to preserve and grow their clients' assets in the long term. Family offices are considered professional investors. They therefore have access to the full range of alternative investments. They invest their clients' capital in many different asset classes in accordance with complex investment and diversification strategies, which is known as a multi-asset strategy.

Multi-asset investments should not be confused with classic mixed funds. A mixed fund is a conventional financial product that usually combines investments in two asset classes. Mixed funds usually bundle stocks and bonds. As a result, the investment fund is stable on two legs; if the stock market shakes, fluctuations can be offset by investing in bonds and vice versa. Multi-asset strategies, on the other hand, are much more diverse and cover a variety of different asset classes.

Illiquid assets for retail investors

The portfolios of the super-rich are therefore colorful patchwork of stocks, bonds, commodities, real estate, private equity, art, cars and other selected tangible assets. Portfolio structuring focuses primarily on illiquid assets to which retail investors simply had no access to so far. This is because investments in such assets are extremely capital-intensive, time-consuming and only come about through professional connections.

Until now, anyone who wants to invest part of their wealth in art had to be familiar with the very inscrutable industry and have connections. Anyone who wants to invest in non-exchange-traded companies as an investor must have personal contact with the C-level. Ordinary retail investors have neither sufficient capital nor the right connections and experience. However, blockchain-based multi-asset platforms are now significantly reducing access barriers for retail investors.

Alternative investments thanks to blockchain: The liberalization of investment

Blockchain technology is changing companies, services, and entire industries. The financial sector is being permanently changed by the ability to make tokenized securities and digital assets tradable with a blockchain. Multi-asset platforms already make it possible to invest in digital shares of real tangible assets. As a result, access to alternative investments is no longer restricted to family offices and professional investors alone. For example, if you purchase digital shares in a work of art, you will benefit from loan and exhibition income in addition to the potential increase in value. If you contribute just a few hundred euros to a real estate project, then you can benefit from distributions of rental income.

Blockchain technology makes transactions tamper-proof and can be carried out around the clock. This completely eliminates intermediaries and the costs they usually incur. To invest in art projects, you no longer need to have exclusive expert knowledge and personal industry connections. With low costs, low entry barriers and a high level of flexibility, private investors can build up a digital portfolio according to their own requirements for their financial future. Your investment is therefore not a mixed fund black box, which is filled by fund managers with stocks and bonds of all types. You alone decide which specific tangible assets you want to invest in, how many digital shares you buy and how long you want to hold them.