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Investor LoginTop 5 Alts: What Women Want
6 min read Oct 11, 2024
Alternative investments, aka alts, are becoming an increasingly large part of both institutional and retail investors’ asset mix, offering as they do the potential for higher returns, uncorrelated assets, and better diversification. Preqin’s Future of Alternatives 2028 report predicts that global alternative assets under management will increase by more than half to US$24.5 trillion by 2028 up from an estimated US$16.3 trillion in 2023.
For my 2024 Rich Thinking® research paper “What’s in your investment portfolio?” I interviewed 50 successful investors (25 women and 25 men) from various backgrounds and cultures around the world. I asked them about their approaches to investing and we discussed the current holdings in their portfolio. My biggest surprise was that men had nearly double the allocation to alternative assets: there is an alts gap!
This gender gap demands attention. Alternative investments are important to any investor portfolio: big money institutional investors have known this for years, male retail investors seem to be moving this way, and female retail investors (at least so far) have been lagging. The defining characteristic of alternative assets is their relative lack of correlation with standard asset classes such as traditional equities and bonds. Adding alts to a portfolio improves overall diversification, reduces risk, and can lead to higher long term returns. Women need and deserve equal access to the world’s fastest growing asset class.
Do women want alts? Yes! In an attempt to delve into the reasons behind the alts gender gap I conducted deep dive interviews with 52 leaders in the global finance industry across 31 cities and 25 countries. With a view to understanding diverse perspectives, I deliberately selected male and female interviewees from a wide variety of leadership roles: academics, corporate directors, founders, senior executives, institutional sales people, traders, portfolio managers, economists, professional investors and management consultants. We discussed the culture of investing in their various regions, geographic trends and nuances, effective and ineffective ways of marketing alts to women, and which categories of alts and investment sectors are of the greatest interest to women.
There are many different kinds of alts, and not everybody agrees on all the definitions. The categories are also expanding over time, but as of now alts include (among others) private equity, private debt, infrastructure assets, private credit, real estate, hedge funds, venture capital, angel investments, startups, defense bonds, crypto, gold, wine, whiskey, art, marinas, luxury goods, collectibles, maritime funds and ‘real assets’ such as farmland, forests, wind parks and solar cell farms.
Here is list of the top 5 alts that appeal to women with supporting quotes.
Top 5 Alts: What Women Want
Private equity
One of the reasons that women are interested in this alt is that private equity can help make the world a better place by investing in environmental and social solutions. Another big reason is the opportunity to earn higher returns! A 2024 study by the Chartered Alternative Investment Analyst Association (CAIA) found a 4.8% premium for private equity returns over public market returns between 2000 and 2023.
“Private equity is of great interest to women for several reasons not the least of which is that as a private equity investor you have opportunities to influence how companies are performing by sitting on the Board or attending quarterly meetings. The women investors I talk to in Anges Quebec are very strong, powerful, and outspoken – there are now about 25-30% women in the club and our CEO (a former investment banker) is a woman. We pay $3,000 per year to see 50 deals and be part of a club that includes ultra high net worth investors so you can hear what they are doing.” Francis Gosselin, Economist and Consultant – Montreal, Canada
“Some of my female friends are highly financially skilled professionals and/or entrepreneurs in the top 10% of income distribution. They will invest in alts (even aggressively!) in a healthy way that falls within the context of their portfolio framework. These women invest significant amounts in private equity because they take a structured multi-year approach to planning.” Raffaella Tenconi, Founder, ADA Economics and Chief Economist, Wood & Company – London, England
Art
The 2023 Deloitte Private and ArtTactic Art & Finance Report predicts that wealth associated with art and collectibles could grow over 30% to an estimated US$2.86 trillion in 2026, mainly due to the increased number of ultra high net worth investors (UHNWIs) across the world and their increased allocation of wealth to art and collectibles. Women appear to connect more to the idea of making an investment impact using art and culture.
“Art is an alternative that is not mentioned in most finance books. We are seeing more interest from women in buying video art, paintings and sculptures and a significant number of the senior leaders at the big galleries or auction houses are women.” Hanna Pri-Zan, Chairperson of Israel Experience – Tel Aviv, Israel
“A lot of alt investors like receiving a regular income from private credit. My favorite alt is my art portfolio: an art loan on art collateral – I get paid every month like a bank. I can just set it and forget it.” Wittney Rachlin, Head of Chase Card and Commerce Customer Experience, JPMorganChase & Co – New York, US
“One alternative asset class that holds great appeal for women is art – female clients are way more likely than male clients to be connoisseurs of fine art. Women collect art mostly because they like the artist or the painting/sculpture…not because they think the piece will double or triple in value in short order like some men who ask our art advisors for assistance in spotting the next Basquiat. Men will collect cars and wine more often than women as well. Due to the level of speculation and illiquidity, we will not lend against cars and wine but certainly lend against art collections. This enables UHNW clients to monetize the millions they have on the wall to invest in investments that can generate a yield.” Nancy Bertrand, Global Market Manager, Head of Citi Private Bank Canada – Toronto, Canada
Private credit/debt
Private credit or private debt instruments often provide more stable and predictable returns compared to traditional equities, and higher yields than traditional fixed income assets like government or corporate bonds. These appeal to women who prioritize financial stability and long term planning.
“Many of the fund managers in this city are women. I go to a lot of women’s events, and I see how easy it is to hand over a cheque to a woman in your trusted network. If you attend any networking event in L.A., one in five people you meet will mention a private debt fund, and many of these funds offer investors a return on investment of 10% or more annually. There is huge potential for women in California who invest in alts!” Natalie Do, Senior Vice President, Torrey Pines Bank – Beverly Hills, US
“Women and men in this business area are equally interested in alternative investments that can offer a relatively sure way of earning regular income. They want surety of cash flow coming in regardless of the sector. We are seeing particular interest in credit lines for bridging working capital, such as cash flow for loans, funding for salaries, confirmed projects etc.” Adelena Lestari Chong, Board Member, Malaysian Alliance of Corporate Directors – Kuala Lumpur, Malaysia
Wine
As they become increasingly financially independent, more women are investing in wine both for personal enjoyment and as an alternative asset class. Many women appreciate the aesthetic and cultural value of owning fine wine.
“In the past, the majority of investors in wine were wealthy white men with an average age of 58. But today according to the Beverage Information Group, 52% of women prefer wine, compared to 20% of men. Women make up 59% of wine buyers! We were very aware of this when we were building our WineFi brand. The average age of the investors on our platform is 36 and 40% of our enquiries come from women, far more than industry averages.” Callum Woodcock, CEO, WineFi – London, England
“Women may like the idea of investing in wine because it provides a feeling of safety…you know what it looks like and what it tastes like. Platforms that offer wine funds and other alts often require a minimum investment of a million Czech koruna (approx. US$50,000.)” Kateřina Bendová, Financial Advisor – Prague, Czechia
Infrastructure assets
Infrastructure investments can support economic growth and job creation, benefiting communities. Women often see investing in infrastructure as helping the environment.
“I like investing in concrete infrastructure assets: buy it and hold it. Don’t sell it half way! By investing in solar or wind turbine parks you invest in something real! But you need to commit for a long time frame.” Anna Jonsson, CEO, Storebrand Asset Management Sweden – Stockholm, Sweden
“Our firm invests in infrastructure technology, and we are certainly underrepresented as women in this alt class. We invest in enterprise technology companies enabling digital transformational changes in old-line industries, including in logistics and manufacturing, supply chain, climate tech, commerce, and financial services technology. We are early at the inflection curve where foundational industries are undergoing major technological and digital advancement.” Jessie Lam, Co-Founder & Managing Partner, Alinea Ventures – New York, US
“In this country women are as sector-agnostic as the men: if it makes me money it is fine! Sure, clean energy is great but in South Africa with our power issues such as rolling blackouts, women don’t care if it is wind power or whatever…they just want to keep the lights on! One trend we are seeing in alternative assets is partnerships between the public sector and the private sector investing in infrastructure such as building a new railway. The investment industry is very open to any type of partnership with the government as long as there will be adequate returns free of corruption.” Caroline Cremen, Portfolio Manager, Adviceworx and Director & Company Secretary, CFA Society South Africa – Johannesburg, South Africa
Watch for the full white paper “Women & Alts: A Global Perspective” for release on October 17th. Click on each name on page 61 to read their full interview.
Guest Post By Barbara Stewart