Insights - 20.03.2020

New Pragmatism with Uncorrelated Assets

Alternative assets are hot topics in the investment sector - not only because they represent new return opportunities. More relevantly in today’s environment, they can also create “distance” from the highly sensitive markets.

The original German article appeared on and on on 18 March 2020.

What is the best possible combination of investment alternatives for compiling an optimal portfolio? Investors should ask themselves this question when making every investment decision. This consideration has become even more essential in today’s market, which is fraught with a severe level of price volatility. It is no longer just about increasing the return opportunities but also making use of an effective risk reduction. The legendary financial economist Harry M. Markowitz once said that cleverly combining different assets and financial instruments minimizes portfolio risk without reducing the expected return. Markowitz’s portfolio theory won him the Nobel Prize in Economics back in 1990. It has become the key principle for each person who studies finance - and also the foundation for actively managed investment portfolios.

Up until now, alternative investments have been used primarily to improve the earnings side without worsening the overall risk. This was due to the well-known and never-ending shortage of sources of return. However, the recent market upheavals in the wake of the corona crisis raise additional questions: What assets can still be classified as being alternative assets? And which of them should be considered? Notably, Markowitz's theory only works on the premise that the investments in a portfolio do not correlate with each other, or if they do correlate, do so only slightly. In today’s market, however, price correlations have occurred where no one would have previously expected. The reason: the increasing roles of the psychological component in (liquid) capital markets, macro-economic influences, and central bank interventions.

Once again, theory and practice have proven to be two different things. What should be done? The answer is to continue to rely on alternative investments to defray some of the risks of the highly sensitive markets. Many experts are predicting a continuing trend towards alternative investments, such as private equity, private debt, infrastructure or real estate. Recent analyses have shown that some of these investments have declined less in value in times when stock market prices are turbulent, yielding positive returns again earlier on. Currently, valuations should be treated with the greatest of caution as in this climate, they are only reliable under certain circumstances. But it is precisely this current valuation dilemma that has also the potential to end up being an advantage for this reason: Private market investors will probably not develop "shaky hands" and should therefore not be inclined towards panic selling. If you keep a cool head, you might find promising investment opportunities, as well as new alternative assets at interesting entry-level prices. Specialized investors with appropriate expertise are on a new playing field.

Either way, it should be worthwhile to stay away from the highly liquid capital market. The non-bankables, which are only slightly liquid or not liquid at all, not only open up a completely new investment horizon with no limits on a thematic level, but they are also less prone to panic in the markets and therefore allow a return to more pragmatism. Let us refine Markovitz's concept of success with the modern possibilities available to us today.

Check out the full article in German (that has appeared on

Click on the picture to read the full article (in German): 
New call-to-action

"If asset managers want to be among the winners of tomorrow, they have to define new assets themselves and bring them to market", says GENTWO’s chairman Patrick Loepfe. Read his former article about the value of alternative assets.

Alternative assets - only alternative or already first choice?

Article (in German)


Insights,Passion Investing Blockbusters as an asset
Blockbusters as an asset

New film concepts like "Game of Thrones" are becoming more and more popular these days. The traditional investment world should keep an eye on this trend. Read an English version of a GENTWO guest article, published in.

Learn More
"Our business model works, and we are profitable."

Patrick Loepfe, chairman of GENTWO, interviewed by Payoff magazine. He talks about his initial idea, today’s product range, and further development.

Learn More
Insights,Video,Event Thank you, #AssetRush!
Thank you, #AssetRush!

The topic of January’s #AssetRush 2020 was “Building Platforms”— and it was a complete success. Get impressions of the fantastic event - watch the movie below!

Learn More
Insights A Bridge Between the Traditional Financial Market and the Digital World
A Bridge Between the Traditional Financial Market and the Digital World

The “Netzwoche” magazine is devoting its current issue to the topic of cryptocurrencies, it’s market, trends, and development. Read GENTWO CEO's latest guest article. The mood in the market is currently positive and.

Learn More
Insights Who will shape the future banking?
Who will shape the future banking?

What are latest innovations of the fintech scene and what is the future of banking? MoneyToday gives insights and an interesting overview of a special that was published in a Swiss newspaper on the 25th of May 2019..

Learn More
Insights GENTWO democratizing the structured product issuance
GENTWO democratizing the structured product issuance

GenTwo is opening access to the market for non-bankable asset securitization for smaller players both on the demand and supply side. Till now, due to, inter alia, tremendous costs, this option has not been available..

Learn More

Latest Posts

Passion Investing NZZ: How cows, forests, and film productions are added to a portfolio
NZZ: How cows, forests, and film productions are added to a portfolio

“Neue Zürcher Zeitung” (NZZ ), one of the oldest Swiss daily newspapers has portrayed GENTWO. Read the article and learn how cows, forests, and film productions can become an interesting part of an investment portfolio.

Learn More
News GENTWO Digital named “Fintech Startup of the Week”
GENTWO Digital named “Fintech Startup of the Week”

Fintech News Switzerland reported on GENTWO Digital, GENTWO's subsidiary for Digital Assets. Read more about the "Fintech Startup of the Week" and the Fintech ecosystem in Switzerland. According to Fintech News.

Learn More
Passion Investing Advanced treatment therapies with no explosion of costs
Advanced treatment therapies with no explosion of costs

Promising health trends have already gained momentum before Corona. In some cases, they have become even stronger in the course of the crisis.

Learn More
Video,Testimonial Partnering with GENTWO: A Bank’s Perspective
Partnering with GENTWO: A Bank’s Perspective

SEBA Bank AG, bank for the New Economy, appreciates GENTWO Digital’s structuring capabilities. The new-built infrastructure solves the need for asset management clients. The goal was to create a common platform where.

Learn More