#Investments — 10.12.2019

Wealth Side Stories #8: Alternative Investments

Julia and Simmon want to find a less volatile investment than stocks, but likely to outperform their fixed income portfolio. Their private banker offers them to invest in alternative investments...


This video is not and should not be construed as an offer to sell or the solicitation of the sale or purchase of securities, financial instruments or any other service. The information and opinions contained herein are derived from publicly available sources that are believed to be reliable, but can not be relied upon or used as a recommendation or investment advice or substitute for the personal judgment of the recipient. They are subject to change without notice. BNP Paribas makes no warranties, express or implied, as to the accuracy or completeness of the information contained in this article, and makes no representations to that effect. Before any promise to purchase or commit to any investment, the reader is invited to seek the opinion of his professional adviser as to the suitability of the investment (taking into account his personal investment objectives, his situation specific needs) and the risks inherent in the latter.



«You know, since there is a lot of uncertainty in the financial markets, our Private Banker would like to come over to explain what we can do to find some investment alternatives.


And you’re right. I was just reading in the newspaper that global economic growth is slowing which doesn't look good for businesses and expectations for bond market yields are low.  Geopolitics also have markets acting skittishly. 



Julia and Simon, based on your investment portfolio and risk profile, I think that I have some investment ideas that should suit your needs and your risk appetite.


Good news.  We’re hoping to find an investment that could be less volatile than equities but that could actually bring better returns than our fixed income portfolio…


Alternative Investments could be an option. They can improve the risk-return profile of your bond and equity portfolio, provide meaningful diversification and aim to deliver an additional return stream whilst potentially avoiding the downturns in markets.


How do they achieve that, Alice?


Alternative investments apply investment techniques and strategies that have proven to have a low correlation to traditional investments in equities and bonds in most market conditions. For example, some strategies are directional, which means they seek to take on some market risk.  Others are non-directional: this means that they seek to make money from the relative value between two stocks or bonds.


Aren’t alternative investments too risky?


Like some other investments, alternative investments do not guarantee performance. They also have their own risks that need to be considered: for example, they can use some leverage or some of them might be less liquid. But my responsibility is to help you and Simon understand them.  Plus BNP Paribas applies rigorous diligence to our alternative fund manager selection, looking thoroughly at a plethora of selection criteria such as performance, risks, the quality of the managers and their organisation. And let’s be clear, alternative investment funds come in different forms, offering varying levels of investor protection – some of which may or may not be suitable - whilst others which are fully integrated in the EU asset management regulatory framework. I’m going to leave you some informational material that you can look over. Let’s speak in a few days when you have had the time to think about it.»


Alice, you have been helpful. Looks like, Julia, that we do have some good complementary «alternatives» for this market uncertainty.  Let’s sit down tonight and really go over the details. 

BNP Paribas Wealth Management Wealth Side Stories

In this new #WealthSideStories series, meet Julia, Simon, Emma and Mimma in different situations impacting their heritage. Discover the solutions that BNP Paribas Wealth Management offers them in response to their problems, whether in real estate or private equity investments, expatriation or diversification.


At BNP Paribas Wealth Management, our dedicated team of alternative investment professionals seeks the best alternative investment strategies to meet your needs, whether they are focused on creating a portfolio with better resilience in bear markets and/or on generating absolute returns.

We believe that our selection, which includes a deep understanding of the inherent risks, can reinforce a traditional portfolio by:

  • Reducing overall volatility,
  • Diversifying your investments across different asset classes,
  • Generating uncorrelated returns versus traditional asset classes, 
  • Improving your overall risk-return profile.

From investment advice on alternative strategies to bespoke alternative investment portfolio management, our experts carefully select alternative strategies from a full range of investment vehicles covering all strategies with varying degrees of liquidity.

With a global network of specialists  and a robust administration team to support them, you can count on us to help you achieve peace of mind in your investment decisions.