Exclusive alternative investments for the risk averse investor

Exclusive alternative investments for the risk-averse investor

Following on from a volatile year and with more volatility potentially on the horizon, Hoxton has sought to source options for investors who are looking to reduce their exposure to equities whilst still achieving a respectable level of growth. With so much in the market, filtering through alternative investments to find options that satisfy our strict requirements was an arduous task. After much deliberation and due diligence, we are happy to present a couple of options we believe tick all the boxes.

TAB – Bridging Loan Bond

Some of you will be familiar with TAB as we have had a strong relationship with them for over a year and many of our clients have had a great experience with this investment. Private debt was an area we identified as a massive opportunity and TAB has been the perfect match for that. Private debt is one of the asset classes that offers the most attractive risk-reward profiles.

Following the last financial crisis, a funding vacuum was created due to stricter banking regulations that restricted the amount of funding traditional banks were providing to small and medium enterprises. The direct lending industry continues to benefit from this and has seen spectacular growth. This growth is expected to continue, with Blackrock predicting returns on direct lending over the next seven years to average 10.4% per year.

We wrote about this area and product in more depth in a previous article called ‘Is private debt currently one of the best opportunities for cautious investors’.

So, what’s new with TAB?

The bond offers a fixed return per year, with interest paid monthly. On a 1-year term the bond will pay 4.5%. On a 2-year term, 4.75% and on a 3-year term 5% a year.

To start the year strong, TAB has given us an exclusive opportunity to offer to our clients an additional 2.5% for the first people to invest this year. The bond can be taken for a 3,4- or 5-year term with a minimum entry of £30,000 and will return 7.5% per annum on each time frame. Interest is paid monthly, meaning an investment of £100,000 will pay you £625 per month.

NHG – Homes of multiple occupancy

This type of investment is best known for things like student housing projects, which is not something we would usually recommend. We came across this opportunity as we were searching for an alternative investment that was socially responsible, secure and liquid.

NHG provide housing to charities that accommodate the homeless and people in need. The charities are up to 90% government funded and have been operating for up to 50 years. The charities lease the properties on a long-term basis – anywhere from 10 to 20 years – and commit to increasing their rental payments in line with the rates of the area.

The major benefits of this kind of investment are:

  • Long term contracted income
  • Management light (Charity contracts building managers)
  • Strong covenant – (Unlikely government funding will be pulled)
  • High return (Between 8-12% pa dependent on the project)
  • Strong asset value (Properties are in central locations and will appreciate over time)
  • Makes a positive impact

If you, like many are looking for low risk, secure investments that will reduce your exposure to volatility, get in touch with us for more information.

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Andrew Hipshon
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