Diversifying with alternative asset classes

When building a balanced portfolio it can pay to look beyond the most common asset classes such as shares and bonds and include alternative asset classes such as currencies and commodities.

Alternative asset classes can act to diversify investment portfolios due to their historically low correlation with other investments – this can help reduce portfolio risk as, for example, asset classes like commodities have tended to rise when shares are going down – and vice versa.

Institutional investors such as large superannuation funds and insurers have successfully been allocating to alternative assets in their portfolios for decades, but until recently it has been difficult for individual investors to do the same. As the range of ETFs available in Australia has broadened, however, adding alternative asset classes to an investment portfolio is now as simple as buying any share on the ASX.

What is classed as an alternative asset class?

While fine wine or art can be classified as alternative investments, commodities and currencies are the more common ‘alternatives’. BetaShares has a number of funds covering these investment options including:

Commodity

ASX Code Description
QAG Agriculture ETF – providing exposure to a basket of the most significant agricultural commodities
QAU Gold Bullion ETF – providing exposure to the performance of physical gold bullion
OOO Crude Oil Index ETF – providing exposure to the performance of an index based on crude oil futures
QCB Commodities Basket ETF – providing exposure to the performance of a diversified basket of commodities including livestock, agriculture, precious metals, industrial metals and energy

Currency

ASX Code Description
USD U.S. Dollar ETF – providing exposure to the performance of the U.S. Dollar relative to the Australian Dollar
EEU Euro ETF – providing exposure to the performance of the Euro relative to the Australian Dollar
POU British Pound ETF – providing exposure to the performance of the Pound relative to the Australian Dollar

In addition to their ability to diversify a portfolio, other benefits of these ‘alternative asset’ funds include:

  • Simple access – all BetaShares alternative asset funds give investors the ability to gain exposure to the performance of the underlying asset as simply as buying any share.
  • Convenient – investors can avoid the complications associated with other ways of obtaining similar exposure, for example directly buying and managing futures contracts, or using CFDs
  • Liquidity – available to trade on the ASX like any share.
  • Transparent – value of the Fund’s assets and net asset value per unit are available daily on our website.

Explore our full range of Funds to find investment tools that help you meet your investment objectives.