Weighing up the alternatives

Journalists love art and collectibles as alternative investments - trees, pieces of art and funky hedge funds are much more fun to write about than boring old recovery funds or the passive vs active debate.

In the real world of actual investment process and outcomes these alternative asset spaces are, in aggregate terms, a thorny subject. The logic behind the search for new asset classes is profoundly sensible – great investors such as David Swensen (boss of the Yale endowment fund) have made an awful lot of money investing in stuff as varied as forestry and CTA hedge funds and macro. In an ideal world the perfect alternative provides the benefits of diversification, low volatility and returns that should be greater than bonds or cash. Ignoring alternatives would be a strategy akin to Ki...