Investors Turn to Alternative Assets During Market Turbulence in 2025

A New Era of Portfolio Construction

By early 2025, investors across North America, Europe, Asia and beyond are navigating a world in which traditional asset allocation models, built around public equities and government bonds, no longer feel sufficient on their own to deliver resilience, yield and long-term growth. After a decade marked by ultra-low interest rates, a pandemic shock, supply-chain disruptions, geopolitical tensions, and a rapid cycle of inflation and tightening by central banks such as the Federal Reserve, the European Central Bank and the Bank of England, market participants are reassessing how they think about risk, diversification and liquidity. Against this backdrop, alternative assets have moved from the periphery of sophisticated institutional portfolios into the mainstream of global investment discourse, and the editorial team at DailyBusinesss has observed this shift first-hand through its coverage across business, finance, markets and investment.

Alternative assets, broadly defined to include private equity, private credit, hedge funds, real assets such as infrastructure and real estate, commodities, venture capital, digital assets and a growing array of niche strategies, are increasingly seen by professional and sophisticated individual investors as essential tools for navigating volatility and structural change. While the traditional 60/40 portfolio model is not dead, it is being re-imagined, with allocators from the United States to Singapore and from Germany to Brazil seeking return streams that are less correlated with listed stocks and sovereign bonds, more attuned to secular themes such as decarbonisation and digitalisation, and better positioned to withstand macroeconomic shocks.

Why Market Turbulence Is Rewriting the Playbook

The turbulence that has defined global markets in recent years is not limited to episodic sell-offs or short-lived corrections; instead, it reflects a deeper sense that structural forces are shifting. Inflation dynamics have been altered by deglobalisation pressures, reshoring of manufacturing, demographic changes and persistent geopolitical tensions, from the ongoing war in Ukraine to strategic competition between the United States and China. As institutions such as the International Monetary Fund have highlighted in their global economic outlooks, investors must now contend with a more fragmented world economy, where regional blocs, regulatory divergence and trade disputes can rapidly influence capital flows, currency values and asset prices.

In this environment, public markets have become more responsive to headlines, policy signals and algorithmic trading flows, often leading to sharp price swings disconnected from underlying fundamentals. Long-duration technology stocks, cyclical industrial names, European bank shares and emerging-market sovereign bonds have all experienced periods of intense volatility, prompting asset owners to question how much of their long-term return profile should depend on daily-priced instruments that can be driven by short-term sentiment. Many are turning to alternative assets because these strategies often involve longer holding periods, negotiated terms and less frequent pricing, allowing investors to focus on cash flows, operational improvements and structural themes rather than reacting to every new data point from sources such as macro-economic indicators or central bank speeches.

For the global readership of DailyBusinesss, which spans founders, executives, family offices and sophisticated retail investors from the United Kingdom to South Africa and from Canada to Japan, this shift is not merely theoretical. It is reshaping how capital is allocated, how risk is defined and how portfolio resilience is measured, and it is prompting a re-evaluation of what constitutes a "core" holding in a diversified portfolio.

The Expanding Universe of Alternative Assets

The term "alternative assets" once conjured images of opaque hedge funds in New York or London and large buyout funds in the hands of a small circle of institutional investors. In 2025, the landscape is far broader and more accessible, with platforms, funds and structures available to investors in markets from Australia and New Zealand to Singapore and the Nordic countries. Private equity remains a cornerstone, with global firms such as Blackstone, KKR and Carlyle raising multi-billion-dollar funds that target buyouts, growth capital and sector-specific strategies. These vehicles aim to generate value by improving the operations, governance and strategic positioning of portfolio companies, rather than relying solely on multiple expansion or leverage.

Alongside private equity, private credit has emerged as one of the fastest-growing segments of the alternatives universe. As commercial banks in Europe and North America have faced tighter regulations and capital requirements following the global financial crisis and subsequent reforms, non-bank lenders have stepped in to provide direct lending, mezzanine financing and special-situations capital to middle-market companies. Reports from organisations such as Preqin and data providers such as PitchBook show a steady increase in assets under management in private credit funds, reflecting investor appetite for floating-rate income streams and a perceived illiquidity premium, especially in a world where listed fixed-income instruments have been buffeted by central bank policy shifts. Investors seeking to understand these dynamics can turn to resources such as global private markets research for deeper analysis.

Real assets, including infrastructure, real estate and natural resources, have also gained prominence as investors search for inflation-linked cash flows and exposure to tangible assets. Infrastructure funds are financing renewable energy projects, digital infrastructure such as data centres and fibre networks, and transportation assets from toll roads in Spain to airports in Asia. Many of these investments are underpinned by long-term contracts or regulated revenue models, offering a degree of predictability in an uncertain macro environment. Learn more about infrastructure as an asset class and its role in institutional portfolios. Meanwhile, real estate strategies have evolved beyond traditional office and retail to include logistics, life sciences, student housing and build-to-rent residential developments, reflecting demographic and behavioural shifts accelerated by remote work and e-commerce.

Hedge funds continue to play a role in providing uncorrelated returns, with strategies ranging from global macro and long/short equity to event-driven and quantitative approaches. While performance dispersion remains high, certain managers have demonstrated an ability to navigate volatility by dynamically adjusting exposures, exploiting dislocations and hedging tail risks. For investors who follow DailyBusinesss coverage of markets and world developments, hedge funds can offer a complementary way to express macro views while maintaining a focus on risk management.

Digital Assets and the Institutionalisation of Crypto

No discussion of alternatives in 2025 is complete without addressing digital assets and the evolving role of crypto in institutional portfolios. After a series of boom-and-bust cycles, regulatory interventions and high-profile failures of centralised platforms, the digital asset ecosystem has entered a phase of cautious institutionalisation. Major jurisdictions including the European Union, Singapore and the United Kingdom have introduced or refined regulatory frameworks governing stablecoins, crypto-asset service providers and tokenised securities, while the U.S. Securities and Exchange Commission has taken a more defined stance on certain digital asset classifications and exchange-traded products.

The approval and growth of spot Bitcoin exchange-traded funds in the United States and other markets have provided a more accessible route for investors who wish to gain exposure to the largest cryptocurrency without directly managing wallets or engaging with unregulated venues. At the same time, institutional custodians, global banks and infrastructure providers have developed more robust solutions for safeguarding digital assets, managing counterparty risk and integrating blockchain-based instruments into existing portfolio management systems. Readers can explore regulatory and market developments through resources such as digital asset insights from the Bank for International Settlements and crypto market data.

Beyond cryptocurrencies themselves, tokenisation of real-world assets has become a significant theme. Asset managers in Switzerland, Singapore and the United Arab Emirates are experimenting with tokenised funds, real estate and private credit instruments, aiming to improve settlement efficiency, transparency and fractional access. For the global audience of DailyBusinesss, whose interest in crypto intersects with broader themes in technology and trade, this convergence of blockchain and traditional finance illustrates how alternative assets are not only diversifying portfolios, but also reshaping market infrastructure itself.

The Role of AI and Data in Alternative Investing

Artificial intelligence and advanced analytics are transforming how alternative asset managers source deals, assess risk, monitor portfolios and interact with investors. In private equity and venture capital, managers are using machine learning models to screen thousands of potential targets across sectors and geographies, identifying patterns in revenue growth, customer behaviour, patent filings and hiring trends that may not be obvious through traditional analysis. Hedge funds and systematic strategies are deploying AI to process vast quantities of unstructured data, from earnings call transcripts and news articles to satellite imagery and shipping data, in order to generate trading signals and risk alerts. For readers keen to understand these developments in depth, AI in finance is an area of rapidly expanding coverage among leading financial publications.

At DailyBusinesss, the intersection of AI, tech and finance has become a central editorial theme, reflecting how technology is reshaping not just trading strategies but also operational processes, compliance, investor reporting and due diligence. Tools powered by generative AI help managers draft investment memos, simulate macro scenarios and stress-test portfolios under different policy or geopolitical outcomes, while advances in natural language processing enable more nuanced analysis of regulatory developments across jurisdictions from the European Union to South Korea.

However, the adoption of AI in alternatives also raises questions about model risk, data privacy, bias and explainability, particularly when investment decisions can have material consequences for employees, communities and markets. Regulators such as the European Commission, through initiatives like the EU AI Act, and agencies in the United States and Asia are increasingly scrutinising the use of AI in financial services, prompting asset managers to invest in governance frameworks and robust testing. For investors evaluating alternative funds, the sophistication and transparency of a manager's data and AI strategy are becoming part of the broader assessment of expertise, authoritativeness and trustworthiness.

Sustainable Alternatives and the ESG Imperative

Sustainability considerations have moved from the margins of investment policy statements to the core of asset allocation debates, particularly in Europe, the United Kingdom and parts of Asia-Pacific. Environmental, social and governance (ESG) factors are now integral to how many investors evaluate risk and return, and alternative assets are at the forefront of this transition. Infrastructure and private equity funds are financing renewable energy projects, energy-efficient buildings, sustainable agriculture and circular-economy initiatives, while impact-oriented strategies explicitly target measurable social and environmental outcomes alongside financial returns. Those seeking to deepen their understanding can learn more about sustainable business practices from organisations such as the UN Environment Programme Finance Initiative.

For DailyBusinesss, whose readers show strong interest in sustainable business models and the future of economics, this trend reflects a broader realignment of capital toward long-term resilience. European regulations, including the EU Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy, have increased transparency requirements for funds marketed as sustainable, influencing practices well beyond the continent's borders. Asset owners in Canada, Australia and the Nordic countries are among those pushing managers to provide robust ESG integration, climate-risk analysis and stewardship reporting across both traditional and alternative portfolios.

In private markets, where investors often have more direct influence over governance and strategy, ESG integration can be particularly powerful. Private equity sponsors can drive decarbonisation initiatives within portfolio companies, improve labour practices, enhance diversity at the board level and engage with suppliers on responsible sourcing, thereby aligning financial performance with stakeholder expectations. Infrastructure investors, meanwhile, can shape the design and operation of assets to support the energy transition, from offshore wind farms in the North Sea to solar projects in India and battery storage facilities in the United States. Resources such as climate finance insights offer further perspective on how capital is being mobilised to address global challenges.

Founders, Venture Capital and the Search for the Next Wave of Innovation

Market turbulence has not dampened the appetite for innovation; if anything, it has sharpened investor focus on durable business models, clear paths to profitability and strong governance among early-stage companies. Venture capital, a core component of the alternatives landscape, has experienced a recalibration after the exuberance of the late 2010s and early 2020s, with lower valuations, longer funding cycles and more rigorous due diligence, especially in markets such as the United States, United Kingdom and Israel. Yet sectors such as artificial intelligence, climate tech, healthtech, cybersecurity and fintech continue to attract significant capital, as investors seek exposure to structural growth themes that transcend short-term macro volatility.

For the entrepreneurial audience of DailyBusinesss, particularly those following our coverage of founders and technology, this environment presents both challenges and opportunities. Founders in Germany, France, Singapore and beyond are expected to demonstrate not only technical innovation but also capital discipline, robust governance structures and sensitivity to regulatory and societal expectations. Venture investors, in turn, are leveraging their networks, operational expertise and sector knowledge to help portfolio companies navigate complex markets, whether that involves expanding into Asia, complying with data-protection regulations in Europe, or accessing public markets in North America.

The interplay between venture capital and other alternative strategies is becoming more pronounced. Growth equity funds are bridging the gap between early-stage venture and traditional buyouts, while corporate venture arms of large organisations such as Alphabet, Microsoft and Tencent are partnering with independent funds to co-invest in emerging technologies. Industry observers can track these developments through global startup and VC data and analyses from leading research institutions.

Employment, Skills and the Human Side of Alternatives

The rapid expansion of alternative assets has significant implications for employment, skills and career paths across major financial centres such as New York, London, Frankfurt, Singapore, Hong Kong, Sydney and Toronto, as well as emerging hubs in cities like Berlin, Stockholm, Dubai and São Paulo. Alternative asset managers, advisory firms, data providers and technology platforms are hiring professionals with diverse backgrounds in finance, engineering, data science, sustainability and public policy. For the readership of DailyBusinesss, which closely follows employment trends, this shift underscores the importance of continuous upskilling and cross-disciplinary expertise.

Roles in private equity and private credit increasingly require not only financial modelling and deal-structuring capabilities, but also operational improvement skills, sector-specific knowledge and the ability to work closely with management teams across different cultures and regulatory environments. Infrastructure and real asset investors must understand complex regulatory frameworks, public-private partnership models and stakeholder engagement processes, especially when investing in essential services such as energy, transportation and digital connectivity. Hedge fund and quantitative strategy professionals, meanwhile, are expected to combine market intuition with proficiency in programming languages, data engineering and machine learning techniques.

Educational institutions and professional bodies are responding by expanding programmes focused on alternative investments, sustainable finance and fintech. Resources such as CFA Institute materials and executive education offerings from leading business schools in Europe, North America and Asia provide structured pathways for professionals seeking to deepen their expertise. As the industry evolves, the ability to communicate complex strategies transparently, adhere to evolving regulatory standards and demonstrate ethical judgement is becoming as important as technical skills, reinforcing the centrality of trustworthiness in the alternatives ecosystem.

Globalisation, Geopolitics and Regional Perspectives

While the appetite for alternative assets is global, the specific drivers, opportunities and constraints vary by region. In the United States and Canada, large pension funds, endowments and sovereign investors have long been significant players in private equity, real estate and hedge funds, and they continue to refine their allocations in response to domestic economic conditions and demographic pressures. In Europe, regulatory initiatives, demographic ageing and the need to finance the energy transition are pushing institutional investors to consider infrastructure and sustainable private-market strategies, while navigating a complex patchwork of national regulations and tax regimes.

In Asia, particularly in markets such as China, Japan, South Korea, Singapore and India, the growth of domestic wealth, the rise of regional champions and evolving regulatory frameworks are shaping the development of local private equity, venture capital and private credit industries. Sovereign wealth funds in the Middle East and Asia, from GIC and Temasek in Singapore to ADIA in the United Arab Emirates, are influential players in global alternatives, deploying capital across continents and sectors. Readers seeking a macro perspective on these shifts can explore global investment trends from organisations such as the World Economic Forum.

In emerging and frontier markets across Africa, Latin America and Southeast Asia, alternative assets are playing a pivotal role in financing infrastructure, sustainable agriculture, digital inclusion and small-business growth. However, investors must carefully assess political risk, currency volatility, legal frameworks and governance standards. Institutions such as the World Bank and regional development banks provide insights into investment climates and the role of private capital in supporting development objectives. For the global audience of DailyBusinesss, these regional nuances underscore that alternative assets are not a monolith; rather, they represent a diverse toolkit that must be tailored to local conditions and global trends.

Practical Considerations for Allocators and Sophisticated Individuals

For institutional allocators, family offices and sophisticated individual investors who follow DailyBusinesss for guidance on investment and finance, the growing prominence of alternatives raises important practical questions. Illiquidity, while often rewarded with a return premium, requires careful planning around cash-flow needs, liability profiles and rebalancing strategies. Fee structures in private markets and hedge funds can be complex, and investors are increasingly scrutinising not only headline management and performance fees but also transaction, monitoring and fund-expense arrangements. Due diligence must extend beyond track records to encompass organisational culture, governance, risk-management frameworks, ESG integration and the robustness of operational infrastructure.

Regulatory environments also matter, particularly for cross-border investors. Tax treatment of private funds, reporting obligations under regimes such as the Alternative Investment Fund Managers Directive (AIFMD) in Europe or equivalent frameworks in other jurisdictions, and evolving rules around marketing to retail and semi-professional investors all influence how and where capital can be deployed. Resources such as global regulatory updates from bodies like IOSCO can help investors stay informed about changes that may affect their allocations.

Technology is making access easier, but it does not eliminate the need for prudence. Digital platforms now offer fractional exposure to private equity, real estate and infrastructure, often targeting affluent individuals in markets from the United Kingdom to Hong Kong. While these innovations can democratise access, they also introduce new layers of platform risk, due-diligence complexity and suitability considerations. For readers of DailyBusinesss, the key is to approach alternative assets with the same disciplined, long-term mindset applied to traditional investments, recognising that the promise of diversification and enhanced returns must be balanced against the realities of complexity, illiquidity and governance.

Looking Ahead: Alternatives as Core, Not Peripheral

As 2025 unfolds, the consensus among many leading asset owners, consultants and policymakers is that alternative assets will remain central to how portfolios are constructed in an era of persistent uncertainty and structural change. The combination of macroeconomic volatility, technological disruption, sustainability imperatives and evolving regulatory frameworks is unlikely to dissipate, whether one looks at the United States and Europe or to Asia, Africa and Latin America. Instead, it is prompting a deeper integration of alternatives into strategic asset allocation, risk management and long-term planning.

For DailyBusinesss and its global readership, covering this evolution means not only tracking fundraising statistics, performance numbers and headline-grabbing deals, but also examining how alternative assets intersect with broader themes in economics, world affairs, news and trade. It involves highlighting the experiences of founders and executives who partner with private equity and venture capital, analysing how infrastructure and real assets shape the future of cities and supply chains, and exploring how AI, sustainability and regulation are redefining the boundaries of what is considered "alternative."

Ultimately, the move toward alternative assets during market turbulence is not a temporary reaction to volatility, but part of a broader rethinking of how capital can be deployed to generate resilient returns, support innovation and address global challenges. Investors who approach this space with a clear understanding of their objectives, a commitment to rigorous due diligence and an appreciation for the interplay between risk, liquidity and opportunity are likely to find that alternatives can play a constructive role at the core, rather than the periphery, of their portfolios. As markets continue to evolve, DailyBusinesss will remain committed to providing the in-depth analysis, global perspective and trusted insight that business leaders, investors and policymakers require to navigate this complex and dynamic landscape.