Alternative investments: How to make money beyond the stock market

​Billionaires are increasingly investing in hedge funds, private companies, and infrastructure. According to BNY Wealth, alternative assets already account for 60% of family office portfolios. But replicating the strategies of the world’s wealthiest investors may be harder than it seems.

The wealthy are reshaping their portfolios

Of every $100 in the investment portfolios of the world’s wealthiest families, just $13 is invested in publicly traded stocks. The rest is spread across real estate, bonds, cash reserves, and alternative assets. These findings come from a BNY Wealth study covering 290 family offices — organizations managing private fortunes ranging from $250 million to $5 billion or more.

Private credit, venture capital, and private equity funds each account for 7% of portfolios. Billionaires are paying particular attention to technology startups, hoping to profit from the development of artificial intelligence.

Major global banks are observing a similar trend. According to JPMorgan Asset Management, alternative assets managed by its private wealth division in the Asia-Pacific region have grown by 40% over the past 12 months. Representatives of Lombard Odier have also reported a sharp increase in the number of family offices planning to expand such investments.

Interest in alternative assets is growing amid concerns about inflation, geopolitical instability, and high stock valuations. Wealthy investors are also worried about the stock market’s dependence on a handful of technology giants. A decline in their share prices could drag down entire indexes and, with them, investment portfolios. Moreover, stocks and bonds sometimes fall simultaneously, meaning that the traditional approach of dividing investments between the two does not always help reduce losses.

However, wealthy investors are not rushing to sell their stocks. A Citi study found that publicly traded equities continue to lead in terms of net increases in investment allocations. Money flowing into alternative investments often comes from available cash reserves and new income rather than the sale of traditional assets.

From business loans to data center construction

Alternative investments offer opportunities to earn returns without buying stocks and bonds on an exchange. For example, an investor can acquire a stake in a private company and profit from selling it later, lend money to a business in exchange for interest, or invest in real estate to generate rental income. Unlike exchange-traded instruments, the value of such investments often depends on the performance of a specific business or project rather than daily market price fluctuations.

Another option is hedge funds, which use complex trading strategies. They can simultaneously buy certain assets and bet on declines in others, attempting to generate profits even during stock market sell-offs. Alternative investments also include gold, works of art, and collectibles. In these cases, the main source of profit is usually an increase in the asset’s value. For example, a rare painting could appreciate significantly over several years if demand among collectors grows.

Cryptocurrencies occupy a special place among alternative investments. According to BNY Wealth, 83% of surveyed family offices already have investments in digital assets or are considering entering the market. A year earlier, that figure stood at 74%. Many wealthy investors have already built their desired positions, while others prefer to watch the market because of its high volatility.

Infrastructure is attracting particularly strong interest. According to the BNY Wealth study, 56% of family offices plan to increase their exposure to this sector over the next year. Investments include financing data centers, power plants, electricity grids, and other facilities. For example, investors can earn income by leasing computing capacity to technology companies. Long-term contracts provide relatively predictable cash flows, while contractual payment adjustments linked to inflation can help offset rising prices.

Another advantage of alternative investments is diversification, which means spreading capital across assets with different sources of income. For example, if technology stocks fall because of concerns about future earnings, rental payments from real estate or interest on business loans may continue to flow. However, returns on such investments depend on the ability of tenants and borrowers to meet their obligations, rather than solely on stock market conditions.

Should ordinary investors follow billionaires’ strategies?

The main challenge alternative investments pose for ordinary investors is accessibility. While stocks can be purchased on an exchange for just a few dollars, investments in private companies and infrastructure projects often require tens or hundreds of thousands of dollars. In addition, many funds are available only to qualified investors. Even for professionals, such deals can be complicated.

Another major drawback is low liquidity. Investments in private companies or infrastructure can lock up capital for years. Even funds that promise periodic withdrawals sometimes impose restrictions on redemptions. For example, in early 2026, some private credit funds faced increased redemption requests. Meanwhile, private assets are valued much less frequently than publicly traded securities, meaning that actual losses may not become apparent immediately.

There is also a risk of losing money because of a poor choice of fund manager or investment project. A borrower may go bankrupt, a startup may fail to find customers for its product, or an expensive data center may struggle to attract enough clients. Investment fund fees create additional costs. Moreover, several seemingly different investments may depend on the same industry. For example, real estate, infrastructure, and private equity funds could all suffer simultaneously if investment in artificial intelligence declines.

Nevertheless, some alternative assets are accessible even to investors with limited capital. Retail investors can gain exposure to gold through exchange-traded funds, invest in real estate through REITs, or buy cryptocurrencies directly. There are also ETFs that invest in infrastructure companies. However, purchasing their shares is different from financing projects directly: these securities trade on the stock market and can decline alongside other equities.

The main difference between a billionaire and an ordinary investor is not just the amount of capital they possess, but also their ability to wait years for returns. Wealthy families can afford to invest in building a power plant or developing a startup and wait ten years for a profit. For retail investors, such a strategy can create serious liquidity problems. That is why, when choosing alternative assets, understanding when and under what conditions invested capital can be recovered is more important than focusing solely on potential returns.