10 Best Australia-Focused Alternative Investments

I’ll go over the Best Australia-Focused Alternative Investments in this post, emphasizing a variety of options outside of conventional equities and bonds. These investments provide portfolio diversification, income potential, and long-term growth.

They range from residential and commercial real estate to private equity, hedge funds, infrastructure, and tangible assets like forest and collectibles. Examine how Australian investors can use alternative assets to strategically increase their wealth.

How To Choose Australia-Focused Alternative Investments

Determine Investment Objectives – Determine whether you want income stream, long-term appreciation, increase diversification of your portfolio, or protection from inflation. The goal will direct your attention to a specific type of alternate investment.

Evaluate Risk Tolerance – Assess your level of comfort with market fluctuations, illiquidity, or loss. The higher the return of the alternate, the more risk it carries. Private equity, for example, is riskier than infrastructure or precious metals.

Think About Investment Time Frame – Some alternatives require a long-term commitment like private equity, agricultural land, and timberland. Some others are more liquid like ETFs or REITs.

Assess Liquidity Requirements – Find out how easy it is to tap into your cash. ETFs, managed futures, or hedge funds are more liquid compared to tangible assets or collectibles.

Look for Professional Oversight – Getting a fund or asset managed by professionals with experience and a strong track record is critical, especially for complex, higher-cost strategies like hedge funds or private equity.

Possibility for Diversification – The ideal investment is one that adds to your current portfolio in a way that lowers the risk and leads to higher overall returns.

Compliance and Tax Issues – Each investment type has its Australian tax jurisdiction, legal protection and regulations, which you should be aware of.

Cost and Fees: Examine the various management fees, entry costs, and other ongoing costs, since those expenditures can affect net returns significantly.

Market and Economic Conditions: Assess the expected impact of interest rates, inflation, and the growth of the economy in Australia for your market of choice in an alternative investment.

Transparency and Reporting: Choose those you can receive and access information about with ease, and those who report transparently and consistently.

Key Point & Best Australia-Focused Alternative Investments List

Investment Option	Key Points / Overview
Australian Real Estate (Residential)	Direct ownership of homes or apartments for rental income and capital appreciation; relatively stable, long-term growth potential.
Hedge Funds (Market Neutral/Absolute Return)	Actively managed funds aiming for positive returns regardless of market direction; typically higher fees but diversification benefits.
Private Equity (Australia‑focused funds)	Investments in private companies, often through funds; potential for high returns but illiquid and long-term horizon.
Agricultural Land & Agribusiness Funds	Investments in farmland or agribusiness operations; can hedge against inflation and provide steady income from crop/livestock production.
Infrastructure Funds (Domestic & Global)	Investments in essential assets like transport, energy, and utilities; long-term stable cash flows and inflation-linked returns.
Precious Metals ETFs (Gold, Silver)	Exchange-traded funds tracking metals prices; serve as a hedge against inflation and currency risks, highly liquid.
Commercial Property (Office, Retail, Industrial)	Ownership or fund-based exposure to commercial real estate; income through leases, potential for capital growth.
Timberland & Forestry Investments	Investing in forests for timber production or carbon credits; long-term growth, diversification, and environmental benefits.
Managed Futures Funds	Funds using futures contracts across commodities, currencies, and indices; potential for returns in rising or falling markets.
Collectibles (Wine, Art, Rare Coins)	Tangible assets with potential long-term appreciation; illiquid, requires specialized knowledge, high-risk, and niche market.

1. Australian Real Estate (Residential)

The investment strategy in Australian residential real estate revolves around acquiring properties such as houses or apartments, leading to increased rental and capital gains, particularly in the bigger urban centers, such as Sydney, Melbourne, and Brisbane, where the demand remains constant due to favorable demographic trends.

Investors are able to positively leverage the market as there are economic and tax benefits to real residential property. Furthermore, compared to public equities, residential real estate is far more stable, albeit there may be market downturns. Real investors with a vested interest and focus on stable income generation will find property to be one of the Best Australia-Focused Alternative Investments.

Australian Real Estate (Residential) Features

Feature	Description
Ownership of Residential Property	Includes houses, apartments, and townhouses in Australia, providing a tangible asset for long-term investment.
Rental Income	Generates steady cash flow from tenants, supporting recurring income.
Capital Appreciation	Properties can increase in value over time, especially in growing urban areas like Sydney, Melbourne, and Brisbane.
Tax Benefits	Investors can benefit from incentives like negative gearing and depreciation deductions.
Leverage Opportunities	Mortgages allow investors to amplify returns using borrowed capital.

Australian Real Estate (Residential) Pros & Cons

Pros:

1. Offers consistent cash flow and the ability to receive reliable rental income.
2. High possibility of capital appreciation in developing cities.
3. Protects from inflation in the form of a physical, real asset.
4. Tax advantages including depreciation deductions and negative gearing.

Cons:

1. Large entry barrier and high ongoing maintenance costs.
2. Value and rental demand affected by property market cycles.
3. Reduced income and cash flow disruptions from vacancies.
4. Compared to other investments, less liquid.

2. Hedge Funds (Market Neutral/Absolute Return)

Market Neutral or Absolute Return Hedge Funds are designed to achieve a positive return regardless of how the market moves. This quality makes them great for diversification.

Most of the time, these funds are using strategies such as long/short equity, arbitrage, or using derivatives to mitigate exposure to the market while making use of inefficient models. Although their fees can be more expensive than traditional funds, hedge funds can reduce the volatility of the portfolio while securing a negative correlation to the market.

They need to be professionally managed so these are esoteric funds more suitable for higher net worth individuals with an able to lose higher amounts. They are consistently found on the lists of the Best Australia-Focused Alternative Investments, as it is one of the more defensive ways to allocate and gain capital in times of market uncertainty.

Hedge Funds (Market Neutral/Absolute Return) Features

Feature	Description
Active Management	Managed by professionals using strategies like long-short equity or arbitrage.
Market Neutral Strategies	Designed to generate returns regardless of market direction, minimizing exposure to overall market risk.
Diversification	Hedge funds invest across multiple asset classes for risk spreading.
Absolute Return Focus	Seeks positive returns even in declining markets, providing portfolio stability.
Accredited Investor Access	Typically limited to sophisticated investors with higher capital thresholds.

Hedge Funds (Market Neutral/Absolute Return) Pros & Cons

Pros:

1. Able to achieve profits in bullish and bearish markets.
2. Investments in a market with negative correlation to equities and bonds, allowing for diversification.
3. Uses sophisticated methods from seasoned professional investors.
4. Reduced volatility by using risk management methods.

Cons:

1. High management and performance costs.
2. Complex investment strategies and hard to understand for retail investors.
3. Fund operations have little transparency.
4. Lock-in periods or other liquidity restrictions.

3. Private Equity (Australia‑focused funds)

Investors in private equity funds purchase equity stakes in companies that are unlisted (private companies). Such companies are mostly in their initial growth stages, and/or have buyout opportunities in Australia. These investments entail a long commitment period of five to 10 years, and most likely will be illiquid in that time period.

These investments, however, have the potential to yield outstanding returns as a result of the initiation of operational improvements, restructuring, and subsequent exiting activities.

Investors will gain a foothold in sectors and sub-sectors of the economy that are not represented in the public marketplace, the likes of healthcare, technology, and manufacturing.

Due to the experienced nature and specialized focus of these funds, private equity is considered one of the Best Australia-Focused Alternative Investments in the marketplace, as it incorporates high returns, growth potential, and diversifies the investment portfolio.

Private Equity (Australia‑focused funds) Features

Feature	Description
Investment in Private Companies	Provides exposure to Australian private businesses, often not listed on public markets.
Growth or Buyout Focus	Targets companies for expansion, operational improvement, or full buyouts.
Long-term Horizon	Investment periods typically range from 5–10 years or more.
Active Portfolio Management	Fund managers actively guide company growth and strategy.
Illiquidity	Investments are long-term and cannot be easily sold before maturity.

Private Equity (Australia‐focused funds) Pros & Cons

Pros:

1. High return potential with the growth or buyouts of private companies.
2. Investment opportunities that are not available in the public markets are accessible.
3. Traditional equities are not the only asset class.
4. Active management has the potential to create greater value and improved operational efficiencies.

Cons:

1. Investments are illiquid and last several years, typically (5-10 years or more).
2. High minimum investments are required.
3. Returns are entirely dependent on the expertise of the fund manager.
4. Portfolio companies have little transparency.

4. Agricultural Land & Agribusiness Funds

Funds that deal in the ownership of agricultural land and in agribusiness have made it possible to provide their investors the opportunity to invest in crop production and in livestock activities in Australia.

There are stable and inflation related returns in these activities due to yields harvested from crops, livestock that is sold, and government agricultural subsidies.

Investments in the agribusiness sector also provide an opportunity to get away from traditional equity and bond investment classes and instead support an essential business sector.

For long term investors, these funds provide an opportunity to invest in tangible and productive assets and are considered to incorporate the Best Australia-Focused Alternative Investments that yield an income and at the same time protect it from the impacts of inflation.

Agricultural Land & Agribusiness Funds Features

Feature	Description
Farmland Ownership	Direct investment in crop or livestock-producing land in Australia.
Operational Exposure	Participation in agribusiness operations like farming and livestock production.
Commodity Market Exposure	Returns often tied to prices of crops, livestock, or agricultural products.
Professional Management	Managed by experienced operators to maximize yield and efficiency.
Government Support	Some agricultural ventures benefit from subsidies or tax incentives.

Agricultural Land & Agribusiness Funds Pros & Cons

Pros:

1. Stable income is generated through the harvest and livestock production.
2. This is a tangible asset that helps diversify the otherwise traditional portfolio.
3. This is a good hedge against inflation for it comes with commodity-related returns.
4. Long-term growth is also a factor especially with the increasing demand for food.

Cons:

1. susceptible to the changing weather, climate, or the impact of natural disasters.
2. Profitability can be affected by the increased volatility and fluctuation of commodity prices.
3. Optimal operations of the investment need professional management.
4. This investment is less liquid than public market investments.

5. Infrastructure Funds (Domestic & Global)

Infrastructure funds target core assets like public roads and privately financed airports and utilities, as well as wind and solar energy than can be shifted to public ownership.

Their assets give stable cash flows, usually with an inflation component, making them a fit for conservative investors. Australian infrastructure, notably the energy grid and transport networks, presents sizeable opportunities for new investment.

Returns can be lower modulated than those on equities, high growth or otherwise. Infrastructure funds are highlighted as the Best Australia-Focused Alternative Investments, for value can be given for investing in the infrastructure of an economy and that infrastructure can be critical to its growth.

Infrastructure Funds (Domestic & Global) Features

Feature	Description
Essential Asset Investment	Invests in roads, airports, energy grids, utilities, and transport networks.
Revenue Generation	Produces steady, long-term income from user fees, tolls, or utility payments.
Inflation Link	Many projects have returns linked to inflation, protecting purchasing power.
Domestic & Global Diversification	Exposure to both Australian and international infrastructure assets.
Professional Fund Management	Managed by experts with experience in large-scale infrastructure projects.

Infrastructure Funds (Domestic & Global) Pros & Cons

Pros:

1. There are stable, and long-term cash flows to be collected from the essential assets.
2. Returns are typically linked to inflation, thereby protecting the purchasing power.
3. Investment portfolio diversification with a low correlation to equities.
4. Access to both global and domestic infrastructure investment opportunities.

Cons:

1. Compared to high growth equities, the growth potential is a lot lower.
2. It is a long-term investment with an illiquid nature.
3. Returns can be affected by regulatory or political risks.
4. For global infrastructure investments, there is a currency risk.

6. Precious Metals ETFs (Gold, Silver)

Precious Metals ETFs represent a claim on gold and or silver as well as other precious metals. Claims, in general, have less documented value over time. Accordingly, gold and silver are associated with less liability, making them a standard hedge. ETF’s based in Australia are on an Australian exchange.

Claims typically do less well when the underlying liability that must be documented, in this case the metals goes down in value. For investors who want to growth a claim as well as have safety, ETFs precious metals are currently classified as the Best Australia-Focused Alternative Investments as documented value can be preserved in times of economic turmoil.

Precious Metals ETFs (Gold, Silver) Features

Feature	Description
Metal Price Tracking	ETFs replicate the price movements of gold, silver, or other metals.
Liquidity	Traded on stock exchanges, offering easy access and exit opportunities.
Physical or Synthetic Backing	Can be backed by actual metals or derivative contracts.
Portfolio Diversification	Provides exposure uncorrelated with traditional stocks and bonds.
Inflation Hedge	Acts as a safeguard against currency depreciation and economic uncertainty.

Precious Metals ETFs (Gold, Silver) Pros & Cons

Pros:

1. Hedge against inflation and currency fluctuations.
2. Has a high level of liquidity and can be easily sold on a stock exchange.
3. Provides a level of diversification in a portfolio with little to no correlation to equities.
4. Can be backed by actual metals and other financial contracts.

Cons:

1. The cost can fluctuate a lot.
2. There is no generating of income.
3. Costs due to varying returns can be a problem.
4. In some cases, can be weak when equity markets are strong.

7. Commercial Property (Office, Retail, Industrial)

Commercial property investment consists of office buildings, retail shops, and industrial buildings, such as warehouses in Australia. These properties create income through lease contracts and can also appreciate in value over time. This is especially true for properties located in prime metropolitan and logistics areas, which are becoming more desirable.

There are many ways in which an investor can gain access to commercial property, such as directly through property funds or Real Estate Investment Trusts (REITs). This type of investment is diversified since it is commercial. There is also an exposure to the more volatile business-driven rental market.

Although commercial property is more heavily affected by economic cycles and the demand of tenants, it is still more stable than other industries. Because of these factors, commercial property is sought by investors wishing to gain long-term capital and consistently earning rental income and is often referred to as one of the Best Australia-Focused Alternative Investments.

Commercial Property (Office, Retail, Industrial) Features

Feature	Description
Property Ownership	Includes offices, retail centers, and industrial warehouses.
Rental Income	Generates cash flow through long-term leases with commercial tenants.
Capital Appreciation	Property values may grow over time, especially in high-demand areas.
Access via REITs	Investors can gain exposure through Real Estate Investment Trusts or direct ownership.
Lease-Based Revenue	Income is generally predictable and tied to contractual agreements.

Commercial Property (Office, Retail, Industrial) Pros & Cons

Pros:

1. Can be a source of regular rental income from tenants.
2. Possible increase in value in some major locations.
3. Diversifies portfolio more than just residential property.
4. Available through REITs or direct property ownership.

Cons:

1. High initial costs and ongoing costs with a property.
2. Can be affected by changes in economy regarding occupancy levels.
3. There are maintenance and legal obligations.
4. Less quick to sell than stocks and bonds.

8. Timberland & Forestry Investments

Timberland and forestry investments are about the ownership and investment of forests and the production of timber, carbon credits, or sustainable harvesting. These assets return positive cash flows through timber production, appreciating land value, and possible environmental benefits. There is strong demand and regulatory support for timber in Australia.

Also, timberland is less correlated to traditional assets, thus providing a diversification and a hedge against inflation. However, it does take a long-term investment horizon and professional management to grow and sustainably maintain the asset.

Forestry is one of the most valuable of the tangible alternative assets, let alone the Best Australia-Focused Alternative Investments, for its sustainable positive financial returns and ecological benefits.

Timberland & Forestry Investments Features

Feature	Description
Forest Ownership	Direct investment in timberland for harvesting or conservation.
Timber Production	Revenue generated through sustainable timber sales.
Carbon Credit Opportunities	Investors can earn from carbon offset programs in some regions.
Long-Term Growth	Forests appreciate over time as timber matures and land value increases.
Professional Management	Forestry operations managed by experts to maximize yield and sustainability.

Timberland & Forestry Investments Pros & Cons

Pros:

1. Real, environmentally friendly asset with value through appreciation over a long period.
2. Also, income can be generated by growing timber and receiving carbon credits.
3. Provides diversification with little correlation to other markets.
4. Has some positive environmental and ecological effects.

Cons:

1. Need to wait a long time with these investments.
2. Prone to fire and other climate risks as well as pests.
3. Hard to sell and needs some management skills.
4. Profit depends on demand for and prices of timber.

9. Managed Futures Funds

Managed futures funds are investment funds that trade futures contracts in different assets such as commodities, currencies, interest rates, and equity indices in a systematic or discretionary strategy. These funds have the ability to provide positive cash flows in both bull and bear markets, thus providing marketable security for investment portfolios.

Professional managers or market inefficiency exploiting algorithms are responsible for the funds. They are often regarded to reduce the volatility and leverage risks associated with the futures.

For the more sophisticated investor class within Australia, they are easily considered among the Best Australia-Focused Alternative Investments, especially when providing protective exposure to different market assets.

Managed Futures Funds Features

Feature	Description
Futures-Based Strategies	Invests in commodity, currency, interest rate, and equity futures.
Systematic or Discretionary	Uses algorithmic or manager-driven approaches to capture market trends.
Low Correlation	Returns are often independent of traditional stock and bond markets.
Risk Management	Leverages risk controls to protect capital in volatile markets.
Global Market Exposure	Provides access to international markets through futures contracts.

Managed Futures Funds Pros & Cons

Pros:

1. There is a possibility of earning returns even when the market is weak.
2. Helps to diversify risk by investing in different asset classes other than stocks and bonds.
3. Allows for investing in different global markets through the use of futures.
4. Offers professionally managed trading.

Cons:

1. Increased leverage and volatility.
2. Retail investors may find these strategies to be complicated.
3. Performance may be inconsistent or not achieved.
4. There could be higher fees for management and performance than expected.

10. Collectibles (Wine, Art, Rare Coins)

Purchasing art, vintage wine, or rare coins allows one to invest in tangible items that possess varying degrees of scarcity, though returns are predominantly driven by provenance, market demand, and expert assessment.

Therefore, specialized knowledge and experience are necessary. Despite offering portfolio diversification and sustained value appreciation, these assets are illiquid, come with high costs of transacting.

Some markets for wine and art in Australia and globally, have shown sustained growth for decades. For people who wish to seamlessly combine passion with investment, these items have become one of the Best Australia-Focused Alternative Investments, enabling enjoyment, wealth preservation, and returns from niche markets.

Collectibles (Wine, Art, Rare Coins) Features

Feature	Description
Tangible Rare Assets	Investment in physical, unique items with historical or artistic value.
Long-Term Appreciation	Potential for significant capital growth over time.
Niche Market Exposure	Provides diversification into markets outside traditional finance.
Specialized Knowledge Required	Expertise needed to select and manage high-value collectibles.
Portfolio Diversification	Acts as a hedge against equity and bond market volatility.

Collectibles (Wine, Art, Rare Coins) Pros & Cons

Pros:

1. Rare, tangible assets may appreciate over the long run.
2. Offers a way to diversify a portfolio outside of the traditional financial markets.
3. There is the potential for very high returns if a winning asset is chosen.
4. Provides a combined passion and investment experience.

Cons:

1. They are illiquid and hard to sell.
2. There is subjectivity in valuing and pricing these assets.
3. There are high costs to get in and to store and insure the asset.
4. These assets require a considerable amount of knowledge and experience.

Conclusion

By combining growth potential, income production, and portfolio resilience, diversifying into alternative investments in Australia gives investors possibilities beyond conventional stocks and bonds.

Each alternative offers distinct advantages and risk profiles, ranging from financial strategies like hedge funds, private equity, and managed futures to tangible assets like residential and commercial real estate, agricultural land, and timberland.

Infrastructure funds provide steady, long-term returns, while precious metals and collectibles offer hedging and diversification benefits. These choices are the Best Australia-Focused Alternative Investments, allowing investors to create a well-rounded, future-ready portfolio that resists market swings by carefully assessing goals, risk tolerance, and investment horizon.

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