Listed alternatives: finding new sources of income and diversification

Today, that framework is being tested.

Investors face a more complex environment characterised by geopolitical uncertainty, shifting interest-rate expectations, persistent inflation concerns and increasing market volatility. At the same time, the relationship between traditional asset classes has become less predictable. During periods of market stress, equities and bonds have often moved in the same direction, reducing the diversification benefits many investors have historically relied upon.

For fund selectors, wealth managers and private banks, the challenge is becoming increasingly clear: how can portfolios continue to deliver income, growth and diversification when traditional building blocks are under pressure?

Enter listed alternatives.

The growing role of liquid alternatives

Alternative investments are not a new concept. Institutional investors have long allocated capital to infrastructure, private equity, private debt and real estate to access differentiated sources of return.

Historically, however, these opportunities have often come with trade-offs. Capital may be locked up for years, valuations can be infrequent and investment minimums can put many opportunities beyond the reach of all but the largest investors.

Listed alternatives offer a different approach. By investing through publicly traded securities, investors can access many of the characteristics associated with alternative assets while retaining the liquidity, transparency and flexibility of public markets. Listed alternatives provide exposure to sectors ranging from infrastructure and specialist property to private capital, asset-backed securities and royalties.

This is not a niche corner of the market. According to Preqin, the global alternatives industry is forecast to grow from US$16.8 trillion in assets under management at the end of 2023 to US$29.2 trillion by 2029 [1]. As investors seek broader sources of income, diversification and return, alternatives are becoming an increasingly important part of portfolio construction.

Source: Aberdeen Investments, August 2026

Beyond equities, bonds and property

One of the most compelling aspects of listed alternatives is the breadth of assets available to investors.

Many investors are familiar with REITs (real estate investment trusts). Yet real estate represents only one part of a much larger universe. Listed alternatives provide access to assets and services that underpin modern economies while generating income from a wide range of underlying activities.

Take digital infrastructure. Cordiant Digital Infrastructure invests in assets such as data centres, fibre networks and telecom towers. As economies become increasingly dependent on cloud computing, artificial intelligence and digital connectivity, these assets have become essential infrastructure for modern life. Long-term contracts can support predictable cashflows while providing exposure to structural growth trends.

Student accommodation offers another example. Empiric Student Property specialises in purpose-built student housing across key university cities. Rather than relying on the fortunes of traditional commercial property markets, income is supported by long-term demand for higher education and accommodation.

Then there are precious metals royalties. Rather than owning and operating mines, companies such as Wheaton Precious Metals provide financing to mining firms in exchange for rights to future production. The result is exposure to commodity markets with lower operational complexity and strong cashflow visibility.

At first glance, these businesses appear to have little in common. Yet they share an important characteristic: their revenues and cashflows are often driven by factors that differ from those affecting traditional equity and bond markets.

This is precisely why investors are paying attention.

Many listed alternatives are supported by long-term contractual revenues, lease payments, royalty streams or essential-use infrastructure. These characteristics can create income streams that are less dependent on the economic cycle than corporate earnings or traditional fixed income markets.

They have also historically demonstrated different risk and return characteristics from traditional assets. Our correlation data suggests many listed alternatives sectors have exhibited relatively low relationships with global equities and bonds, helping broaden sources of return within diversified portfolios. Meanwhile, our analysis of previous market stress events indicates that alternative assets backed by infrastructure, specialist property and long-term contractual cashflows have often experienced smaller drawdowns than broader equity markets.

Why this matters for Asia

This is particularly relevant in Asia, where income remains a priority for many investors and portfolios can often be concentrated in traditional sources of yield such as property, cash and equities, and high yield fixed income. Listed alternatives offer access to a broader set of income streams while maintaining the liquidity and transparency that many investors value. In addition, the underlying cashflows are often supported by long-term contractual arrangements, helping to deliver a more stable and predictable income stream than traditional asset classes, where income levels can be more sensitive to changes in interest rates and market conditions.

The opportunity set is also expanding. Income today can come from renewable energy infrastructure, data centres, specialist property, royalties, asset-backed finance and a growing range of alternative assets that were once accessible only to large institutional investors.

Looking beyond the traditional toolkit

The case for listed alternatives is not about replacing equities or bonds. Rather, it is about recognising that the investment universe has evolved. As investors search for new sources of income, diversification and resilience, listed alternatives offer access to a growing range of assets that sit beyond the traditional portfolio toolkit. 

Can investors afford to ignore them any longer?

Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.

[1] Source: Preqin, Future of Alternatives 2029, September 2024.