For generations, the investment playbook in Australia has been largely dominated by shares and property. They’re familiar, tangible, and historically profitable. But in today’s market, relying solely on this two-pronged approach can feel a bit limiting. Interest rates shift, property prices plateau, and share markets can move unpredictably from optimism to anxiety in the span of a week. As such, more Australians are exploring alternative investment strategies to balance risk and uncover new sources of return.
This blog delves into 10 alternative investment strategies that can help diversify a modern investment portfolio.
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Private Credit
Private credit, also called non-bank lending, is steadily gaining traction in Australia. It involves investors providing loans directly to businesses, bypassing traditional banks. The appeal lies in its combination of predictable income and when paired with tangible asset backing, capital preservation; qualities that tend to resonate during uncertain times.
Funds such as the Rixon Income Fund are good examples, offering investors exposure to secured tangible asset-backed loans while targeting regular monthly distributions. For many, it’s a refreshing change from the volatility of equities and the illiquidity of direct property.
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Private Equity
While private credit focuses on lending, private equity is about ownership. Investors take stakes in unlisted companies, looking to scale, innovate, and restructure. The potential upside can be substantial, though it’s balanced by higher risk and longer investment horizons.
In Australia, private equity tends to attract wholesale and sophisticated investors seeking exposure to potentially material capital gains. Returns may take years to materialise, but that’s a ncessary evil: patient capital, quietly compounding in the background.
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Real Estate Debt & Mortgage Funds
For those who still like the familiarity of property but not the headaches of direct ownership, real estate debt or mortgage funds can offer a middle ground. Here, investors fund loans secured against real property, earning income through regular interest payments.
Compared to direct property investment which is an equity exposure, an investment in the underlying debt translates into substantially reduced exposure to the volatility of expected & unexpected maintenance costs or tenant vacancies. Many Australians use this to stay connected to the property market while focusing on income generation – albeit lower than corporate and SME private credit – rather than capital growth.
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Infrastructure Funds
Think roads, renewable energy, data centres, or utilities, assets that people rely on regardless of market mood. Infrastructure funds invest in large-scale projects that often deliver long-term, inflation-linked returns.
For investors, the stability and steady cash flow can be appealing. Infrastructure also tends to move differently from shares and property, helping smooth out portfolio volatility. It’s not glamorous, but dependable rarely is.
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Venture Debt
Sitting somewhere between private credit and venture capital, venture debt provides financing to high-growth startups without diluting ownership. It’s a relatively new concept in Australia, but one that’s growing quickly as the local startup ecosystem matures.
For investors, venture debt can offer higher yields than traditional credit with the added excitement of supporting innovation. Of course, risk levels are elevated given the nascent nature of underlying borrowers, but so are the returns.
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Hedge Funds & Market-Neutral Strategies
Market downturns are stressful for most investors, but hedge funds often see them as opportunities. These funds use complex, sometimes counterintuitive strategies such as short selling, derivatives, or arbitrage to profit regardless of whether markets rise or fall.
Market-neutral approaches, in particular, aim to generate returns with minimal correlation to shares or bonds. They’re not for everyone, but they can serve as a defensive anchor within a broader investment strategy.
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Commodities & Natural Resources
Gold, energy, and agriculture: these assets have underpinned economies for centuries. Commodities remain a powerful way to diversify, especially in inflationary environments. They tend to perform well when traditional markets falter, acting as a natural hedge.
Australian investors often have the advantage of familiarity relative to most of the world here, given the country’s rich resource base and expertise in the sector. Still, commodities can be volatile, so position sizing and timing are key.
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Collectibles and Alternative Assets
Art, fine wine, vintage cars, and collectibles have emotional appeal alongside potential financial return. These alternative assets can appreciate significantly over time, though they’re typically illiquid and require niche knowledge.
Investors drawn to these markets often appreciate the tactile nature of owning something real, something beautiful. It’s not a mainstream choice, but for some, that’s precisely the point.
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Sustainable & Impact Investments
Finally, the rise of sustainable and impact investing has reshaped how Australians think about wealth. ESG (Environmental, Social, and Governance) strategies allow investors to pursue financial returns while contributing to positive social or environmental outcomes.
It’s not just a feel-good exercise. Regulatory frameworks and consumer demand are pushing institutions toward transparency and sustainability, creating genuine long-term opportunities.
Conclusion
Exploring alternative investment strategies beyond shares and property isn’t about abandoning the familiar; it’s about strengthening your financial foundation. From private credit and infrastructure to impact investing and collectibles, each of these ten strategies brings something unique to the table. Diversification is all about keeping portfolios resilient through cycles of boom and correction.
It’s important to note that alternative investments require careful consideration, understanding the risks, time horizons, and liquidity constraints. For many investors, professional guidance makes all the difference.
Looking to diversify your portfolio with tailored investment strategies?
Contact Rixon Capital to explore a range of alternative investments suited to your goals. Our experienced team can help you design a balanced, resilient portfolio, whether you’re seeking consistent income, long-term growth, or stability through changing markets.
