An alternative investment is regarded as an investment product other than traditional investments such as stocks, bonds, money markets and/or cash.

As the definition of Institutional Investor magazine's Alternative Investment Newsletter, alternative investments include:

• commodities,
• financial derivatives,
• hedge strategies (or absolute return strategies),
• real estate
• private equity, and
• venture capital.

Alternative Investments are supposed to have very low correlation with traditional investment products. However, this definition may not be suitable due to a fast-changing investment environment, and should be re-considered over time.

The chart below shows how alternative investments and traditional investments compare on a risk return basis

^The chart illustrates the relative risk and return of traditional investments and structured and alternative investments based on the historical general trend of the average returns on these types of asset classes over a long investment term (5 years or more) only and is not representative of the actual performance of any particular products. Past performance is not a reliable indicator of future performance.

Creating a diversified portfolio by including alternative investments, such as hedge funds or hybrid securities could lower the overall risk of your portfolio and generate higher returns over the long-term, as these investments are typically structured to enhance their risk and return profile.

Because everyone's risk profile and financial needs differs, you should consult a financial adviser before investing.

For more information on how you may be able to incorporate alternative investments into your portfolio call the Asian Desk  on + 61 2 8215 5033.