WAM Alternative Assets (ASX: WMA) provides retail shareholders with access to a diversified portfolio of alternative assets, including real assets, private equity, real estate, infrastructure and aims to expand into new asset classes such as private debt and others. WAM Alternative Assets offers retail shareholders liquidity and a relatively stable stream of dividends through its listed investment company structure.
Driven by market sentiment, rather than the performance of its underlying assets, WAM Alternative Assets short term fall in its share price is currently providing existing and prospective retail shareholders with an attractive entry point. Based on the 15 July 2022 closing share price of $1.065, the investment portfolio is trading at a 14.9% discount to the 30 June 2022 pre-tax NTA of $1.25. In addition, WAM Alternative Assets is providing shareholders with an annualised fully franked interim dividend yield of 3.8%, driven by investment returns largely uncorrelated to equity markets.
WAM Alternative Assets currently holds 27.4% cash, with 24.6% committed to new investment opportunities in infrastructure, healthcare real estate, industrial last mile real estate, mid-market buy-out private equity and turnaround and special situation private equity strategies. The investments in the portfolio provide shareholders with strong diversification benefits due to their low, and in some cases negative, correlation to equity markets. The investment portfolio is structured to provide shareholders with a combination of capital growth and income, with the income producing portion of the portfolio serving as a natural inflation hedge. The returns from the underlying investments in the portfolio typically have low volatility compared to equity markets due to their specific investment characteristics.
The WAM Alternative Assets investment portfolio follows a holistic portfolio construction approach, where it has a mandate to invest in a broad opportunity set. The investment philosophy is driven by thematic investing, where the strategies are selected within megatrends with strong tailwinds, such as growing ageing population, digitalisation, climate change and growing demand for food.
The portfolio’s exposure to private equity investments provides valuable exposure to capital appreciation strategies that have increased potential for high returns, while also maintaining a focus on value investing which is preferential in times of market volatility. Its holding in real assets provides further downside protection and low correlation to equities while the Company’s real estate exposure provides an attractive risk-return profile including yield through rental income. Further, the Company plans to expand into private debt and other alternative asset classes.
WAM Alternative Assets is the only listed investment company in Australia providing retail shareholders access to a range of alternative asset classes that are traditionally reserved for institutional shareholders due to their low liquidity, high complexity and large minimum investment ticket size. Join more than 75,000 weekly readers by subscribing to our investment insights and market updates on our website or visit YouTube to watch our education and megatrends series to find out more about investing in alternative assets.