How Avantis Wealth are Helping High Net Worth Individuals Grow Their Wealth Through Fixed Income Investments
Changes to the investment market, due to factors like COVID and fiscal policy amends, are leading to many high net worth investors exploring alternative assets to diversify their portfolios. One such alternative investment gaining traction with investors are fixed income property investments
We explore how this and other alternative investments are faring in the current market climate, and why fixed income investments, like property, are a good investment option. We also unpack how expert alternative property investment brokers like Avantis Wealth are growing investors’ portfolios through fixed income investments that deliver.
What are alternative investments and why do high net worth individuals include them in their portfolios?
A broad term that encompasses a range of tangible assets and commodities like real estate, alternative investments are investments in anything other than listed equities, bonds and currencies. Often, ultra high net worth individuals have, roughly, 50% of their assets invested in alternative investments, and this is likely to increase in the coming years.
Because alternative investments don’t correlate directly with stock market and traditional investment performance, they can offer portfolio diversification while helping to manage volatility and inflation risk. As such, they are an attractive investment alternative for investors, and the alternative investment industry is set to grow to up to $14 trillion by 2023.
Specifically because of the superior risk-adjusted returns they deliver, alternative investments tend to be very profitable to investment companies and advisors, and are therefore heavily promoted to high net worth and sophisticated individuals. And as investors reassess the market post-COVID, with no real indication of the long-term economic impact it’s had, investors are strengthening and diversifying their portfolios by opting to include alternative investments.
However, despite their growing popularity, alternative investments are largely illiquid and can therefore be unsuitable for investors looking to generate income from their investments. Luckily, there are fixed income investments available in the alternative market that can provide investors with some liquid in the form of regular income returns. These are worth exploring for investors looking for increased portfolio growth and additional income streams.
Why choose property as an alternative, fixed income investment?
Between 2017 and 2020, High Net Worth Investors shifted their alternative investments to private equity and real estate, resulting in a 10-15% increase in gains for both types of investments - the largest percentage gains among all assets, including traditional investments.
More recent developments, however, are also contributing to this increase in alternative investments like property. With UK inflation rates reaching new highs in October 2021, and with inflation looking to rise further this year, investors are assessing the UK’s alternative investment landscape for opportunities to sustain and grow their portfolios in the face of adverse fiscal developments.
Fixed-term property bonds, for example, have become more popular of late as investors look to combat inflation-accelerated capital erosion. Additionally, because these property bonds are contributing to the growth of the UK housing market, they offer appealing benefits to investors, including interest rates typically between 6% and 8%.
When compared to traditional bonds, fixed-term property bonds not only offer competitive interest rates and a more convenient “hands-off” investment, but they can also offer compelling tax benefits. When investing through an ISA, investors are allowed to use part or all of their tax-free ISA allowance of £20,000 to invest in ISA-eligible property bonds, making any growth on their investment resistant to typical capital gains or income tax requirements.
How do fixed income property investments compare to buy-to-let investments?
In previous years, property investment for many investors meant investing in buy-to-let property options. While this was a good choice before, changes to the buy-to-let environment have significantly impacted the appeal of this investment.
Some of these changes include:
- New tax regulations which increasingly disallow mortgage interest as a deductible expense
- Agents not being allowed to charge fees to tenants, which in turn means that they have had to recover more money from landlords
- Deposit registration regulations, resulting in increased costs and administration
- More restrictive rules about qualifying for a buy-to-let mortgage, particularly for investors over 65
Additionally, property damage costs, general wear and tear replacement costs, increasing service charges and periods of non-occupation have made buy-to-let investments more admin- and cost-intensive than is ideal for investors. Not to mention tenants that skip out on rent payments, leaving landlords with extra costs to cover.
Fixed-term property bonds, on the other hand, are issued for a single project at a time, with a maturity rate of between 1 and 5 years - a significantly shorter commitment period than buy-to-let mortgages. Additionally, they deliver much higher returns, meaning more profit and less costs for investors.
Growing your portfolio with Avantis Wealth
At Avantis Wealth, our property investment experts have spent years developing and refining an investment strategy that includes investments based on loanership rather than ownership, giving our clients more ways to achieve income through high returns on investment. Our investment portfolio includes investment opportunities that offer investors annual returns of between 7% and 15%, and we never charge clients fees at any stage of the investment.
We make our due diligence research available to achieve maximum transparency in our choice to bring highly scrutinised investments to our clients.
We are also dedicated to minimising risk, and we do this through:
- A solid business plan with proven director experience, a defined exit strategy and stringent due diligence included
- Security in place
- Returns to investors that significantly outweigh the investment risk profile.
Alternative investments are here to stay, and investing in alternative investments like fixed income property investments can prove fruitful to high net worth investors looking to hedge their portfolios against inflation and market risk.
When selecting a fixed income investment, having the expert insights of an experienced investment broker like Avantis Wealth can help you make the right investment decision, and see you growing your wealth sooner rather than later.
If you would like to explore our portfolio of fixed income property investment opportunities, or if you’re ready to make an investment, reach out to our expert broker team and they’ll be delighted talk to you..