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The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.

The Bureau of Labor & Statistics issued its latest update on 9/13 regarding the rising pace of inflation, with the 12-month period through August rate of 8.3% catching most investors and analysts by surprise, and not in a good way. 2022 inflation is at highs not seen by those born after 1989, and it feels a bit ominous on the investment horizon.

At the start of this year, Bloomberg issued some consolidated findings from 500+ investment outlooks. A few highlights from this January 2022 publishing seem prescient now in September 2022, particularly these:

  • “Inflation” is the most frequently cited term in our selected calls, appearing 224 times. For Fidelity, the Federal Reserve management of rising rates will be key to its path: “the margin for error will be fine, making the probability of policy mistakes high.”
  • When everything already looks expensive, the expected upside is smaller. Single-digit stock returns are the broad consensus.
  • Bank of America offered its view that capital preservation will grow as a theme in the year ahead.
  • Countless outlooks have sections dedicated to environmental, social and governance investing, though specific strategies were hard to come by. And despite a blockbuster year, scant attention was paid to digital assets.


When the world looks scary and vulnerable, hedge funds and private equity fund managers get reinvigorated at the opportunities presented to them to both invest and attract capital. Ten years ago, I wrote an article called ‘A Battle Cry For Hedge Funds—Separate But Not Equal,’ which was to remind investors how they are different from traditional assets and why their differences matter in the overall allocation process. A summary excerpt from this piece follows:

It’s time to reestablish the relationship of hedge funds to more traditional asset classes.  Hedge funds exist to serve a vital component in investment allocation. They are meant to behave differently and not to correlate to broader market moves.  Hedge funds are costly to build and maintain, but the global markets need their presence to provide both an attractive investment allocation and to support the overall liquidity of multiple asset classes.  Investors should not be asking for affordability and liquidity beyond the parameters of a hedge fund product, but rather for a greater understanding of what makes a hedge fund valuable.  By so doing, the investor can separate the hedge fund wheat from its chaff and make better, and more informed, investment decisions.

So, with an eye to the future months to come, as global inflation appears here to stay and likely increase, what should alternative investors look at? An obvious choice is real estate, which historically performs well during inflationary periods. There are many real estate-focused investment options to explore, both in the hard asset itself and strategies that employ the real estate sector to deliver attractive returns.

There are other, less familiar investment alternatives to consider as well, including hard assets and commodities, farmland, private lending, luxury goods like art and wine, and the digital currencies which are expanding rapidly in the financial forum.


I made a key point regarding these alternative funds in my 2012 article referenced prior that: Many hedge fund strategies rely on a singular ability to execute investment strategies which are unique and provide an ‘edge’ over traditional investment options.  Hedge fund managers are all too sensitive to the real-time fact that, if one does not offer some tangible difference in achieving value for investors, the likelihood of success in retaining and accruing capital is extremely small.  Liquidity control can play a key role in many of these unique strategies.  Some managers rely on overlay strategies within their overall fund approach to mitigate short-term market conditions and to preserve the essential investment philosophy and trading approach.  Some rely on investment options which, by their nature, involve markets with far less liquidity than traditional equity and bond markets.  In many cases, forcing the hedge fund manager to offer liquidity beyond what their essential value ‘edge’ allows is detrimental to both the fund’s performance and the investors’ returns.

What investors can demand, and in fact have done so very effectively over the past decade, is to receive better and clearer information about their investments, the strategies and their execution, and overall communication frequency and format from the fund to each investor. These areas have evolved into a robust and responsive operational must-have for the successful fund managers through their third-party providers and/or their internal communication teams. 

With a greater understanding of what these alternative investments are meant to do and the information flow of how they are achieving these alternative goals, investors wary of inflation can feel some sense of control over their ability to ride out this next wave of investment angst.

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