Alternative Investments Australia — Beyond Shares and Bonds (2026)

Alternative investments are assets that fall outside the traditional categories of shares, bonds, and cash. They include gold, commodities, infrastructure, private equity, hedge funds, real assets, and more. For Australian investors, alternatives can provide diversification, inflation protection, and returns with low correlation to the share market — though they typically come with higher complexity, lower liquidity, or higher fees.

What Are Alternative Investments?

The alternative investment category is broad — encompassing any investment that isn’t a standard listed share, government bond, or cash deposit:

Why Consider Alternatives?

Diversification: Many alternatives have low or negative correlation with Australian shares — their prices don’t move in sync with the ASX. Adding alternatives may reduce portfolio volatility.

Inflation protection: Gold, commodities, and real assets (infrastructure, property) have historically maintained value during periods of high inflation.

Return enhancement: Some alternatives (private equity, venture capital) have historically delivered higher returns than public markets over long periods, at the cost of illiquidity.

Income: Infrastructure assets and real assets generate predictable cash flows — toll revenues, pipeline tariffs, utility revenues.

Key Risks of Alternatives

• Liquidity: Many alternatives are illiquid — you cannot sell quickly at a fair price
• Complexity: Understanding alternative risks requires more research than a standard ETF
• Fees: Alternative fund managers typically charge significantly higher fees than index ETFs
• Valuation uncertainty: Unlisted assets are not priced daily — valuations may be stale
• Regulatory risk: Cryptocurrency and some P2P lending sectors face evolving regulation

In This Section

Related Sections

• Term Deposits Australia
• Bonds Australia
• Income Investing Australia
• Investing hub

How Alternatives Fit in an Australian Portfolio

Most Australian financial planners recommend keeping alternatives to 5–20% of a total portfolio, with the remainder in traditional assets (shares, bonds, cash). The rationale is diversification — alternatives with low correlation to the ASX can reduce portfolio volatility without necessarily reducing expected returns.

The practical challenge for retail investors is access. Many high-quality alternative assets (unlisted infrastructure, private equity, hedge funds) are only available to wholesale investors — those with at least $2.5M in investable assets or $250,000/year in gross income. Retail investors can access alternatives primarily through:

1. ASX-listed ETFs — Gold (GOLD, PMGOLD), commodities (QCB), crypto (CRYP, EBTC, ETHI’s crypto holdings), infrastructure (VBLD, GLIN), REITs
2. Listed Investment Companies (LICs) with private equity mandates
3. Super funds — Many large super funds allocate 15–25% to unlisted alternatives (infrastructure, private equity, direct property)

Gold — Australia’s Most Popular Alternative

Gold is the most widely held alternative investment in Australia, primarily through:

• ETF Securities GOLD (ASX: GOLD) — physically backed by gold bars in a London vault; AUD-denominated but unhedged against USD movements
• Perth Mint Gold (ASX: PMGOLD) — backed by Perth Mint gold holdings; government guaranteed by Western Australia
• Physical gold — coins and bars from Perth Mint or other dealers; requires secure storage

Gold has historically served as a hedge against currency debasement and systemic financial stress. It produces no income (no dividends, no interest), so the entire return comes from price appreciation. In AUD terms, gold returns are also affected by AUD/USD exchange rate movements — a falling AUD boosts the AUD gold price and vice versa.

Cryptocurrency as an Asset Class

The ATO treats cryptocurrency as a CGT asset — not as currency. This means every disposal (sale, exchange, or even using crypto to purchase goods) is a CGT event. Australian investors must track the AUD value at the time of each transaction.

Cryptocurrency ETFs on the ASX (CRYP, EBTC, ETHI) allow exposure without holding crypto directly, and without the technical complexity of custody and private keys. These are standard ETFs subject to standard brokerage and held on CHESS.

The volatility of cryptocurrency is substantially higher than any traditional asset class. Bitcoin has experienced multiple drawdowns exceeding 70–80% from peak to trough. For this reason, sizing exposure conservatively (1–5% of portfolio) is common among investors who include crypto as a speculative alternative allocation.

Frequently Asked Questions

Is investing in alternatives suitable for all Australians?

Alternatives are generally appropriate only as a supplementary allocation within a broader diversified portfolio — not as a primary investment strategy for most retail investors. The complexity, fees, and liquidity constraints of many alternative assets make them unsuitable for those who may need access to funds within 1–3 years, or who do not have the time to understand the specific risks involved.

Do alternative investments have better returns than shares?

Not necessarily, and not on a consistent basis. Unlisted infrastructure and private equity have historically delivered strong long-run returns — but with illiquidity risk. Gold has preserved purchasing power over very long periods but underperformed shares over most 10-year rolling periods. Hedge funds and many alternatives have delivered returns below their fees after costs. Past performance is not a reliable indicator of future performance.

How does the ATO treat alternative investments for tax?

Most alternative investments held directly by individuals are treated as CGT assets — the 50% discount applies if held over 12 months. Exceptions include income from REIT distributions (assessed as income), gold held as personal use property under $10,000 (exempt), and crypto (CGT asset — no annual exclusion). Tax treatment of alternative investments can be complex; a registered tax agent can clarify your specific situation.

Risks of Alternative Investments in Australia

Alternative investments carry risks that differ from mainstream shares and bonds. Investors should understand these before allocating:

Liquidity risk: Many alternative assets cannot be sold quickly. Private equity funds have lock-up periods of 5–10 years. Some unlisted property funds restrict withdrawals. Infrastructure investments may have no secondary market. Unlike ASX shares, you cannot exit in seconds — planning your liquidity needs before investing is essential.

Complexity and due diligence: Alternative investments often have complex structures, fee arrangements, and risk factors that are not obvious from marketing materials. Product Disclosure Statements (PDS) can be lengthy and technical. ASIC recommends thoroughly reading the PDS and considering independent advice before investing.

Valuation opacity: Unlike publicly traded shares or ETFs, the price of many alternative assets is calculated infrequently (monthly or quarterly), based on internal valuations rather than real-time market prices. This can understate volatility — the underlying assets may fluctuate more than the reported price suggests.

Concentration and counterparty risk: Investing in a single infrastructure asset (e.g., one toll road), a single property, or one private equity fund concentrates risk. Diversification within alternatives is as important as it is in mainstream investing.

Higher minimum investments: Many institutional alternative investments have minimums of $50,000–$500,000. Retail access typically comes through managed funds or ASX-listed listed investment trusts (LITs), which have lower minimums but may trade at a discount or premium to net asset value.

For most retail Australian investors, gaining alternative exposure through ASX-listed infrastructure stocks, diversified property trusts, or gold ETFs is simpler and more liquid than direct alternative investment products.

This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.