Non-market linked investments are those that do not track the performance of a specific market or index. These investments are unaffected by stock market, interest rate, or other economic indicators fluctuations. Non-market linked investments can help to diversify and reduce risk in a portfolio.
An Arbitrage Fund is an example of a strategy that involves taking advantage of price differences between two or more markets or securities in order to profit with little or no risk. The goal of arbitrage is to buy and sell the same asset or financial instrument in different markets or at different prices at the same time in order to profit from the price difference.
Investors should carefully consider their investment goals and risk tolerance before investing in Non-market linked investments.
When is Non-market linked investment included in a portfolio?
Non-market linked investments are used to reduce market volatility because they are mostly unaffected by fluctuations in the stock market or other economic indicators, and they may provide a way to diversify a portfolio and thus reduce market risk.
Suitability
Non-market linked investments may be suitable for a wide range of investors, including those looking to diversify and reduce risk in their portfolio. They may be especially suitable for investors who:
Are looking for long-term investments that are stable: Non-market linked investments, such as fixed income securities can provide a consistent source of income as well as capital appreciation over time.
Have a lower risk tolerance: Non-market linked investments are generally thought to be less risky than market linked investments, such as stocks, and may be more suitable for risk-averse investors.
Caution
Non-market linked investments may have lower long-term potential returns than market linked investments. Furthermore, some non-market linked investments may have liquidity issues and it may be difficult to convert to cash, which can be a disadvantage for investors who need quick access to their investments.
