Alternative investments have become popular in recent years.
If you think that you are not invested in the field, it is not so - alternative investments have increased both in the investment portfolios of the institutional bodies in Israel and in the world that manage for households, among other things, also the pension savings.
This, of course, is in addition to the direct investments in the field made by the residents of Israel.
So what is an alternative investment?
An investment that takes place outside the tradable capital markets.
This investment can be in many areas such as social loans, crypto-currencies, hedge funds, infrastructure, biotech, real estate in Israel and abroad, renewable energy and more.
Why has this field grown in recent years?
These years were characterized in the world in general and in Israel in particular by low interest rates, and these investments allowed further diversification of the investment portfolios and the potential for a high return and non-damage to the investment portfolio in this part during the days of falling rates in the capital markets.
But aside from the potential for return from the investment there are also risks that must be taken into account, which sometimes exceed those in the tradable capital market.
The investments in the stock exchanges are made on the basis of prospectuses and updated information that the companies must publish in accordance with the regulation in each country, while in the alternative investments the disclosure is less and is not regulated and the risk inherent in them must be carefully examined.
This examination is the basis for making the decision whether or not to join the investment, in addition to other variables that must be examined such as the taxation aspects of the investment.
Examining the taxation aspects should take into account, among other things, the tax rates applicable to financial instruments tradable on the stock exchanges as well as the existence of the possibility of offsetting losses in these instruments.
Also, there are relatively high minimum investment amounts in these investments.
In addition to this, trading in stock exchanges in Israel and around the world takes place frequently and continuously five days a week, while liquidity in alternative investments is limited to relatively limited exit points defined in advance.
In recent times, characterized by an increase in inflation and interest rates in the world and in Israel, a rethinking and an appropriate balancing of the investment portfolios, also of the households, are required, taking into account the pension investments and examining all the components.
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