In a world where traditional stocks and bonds are increasingly challenged by volatility, low yields and macro-headwinds, investors are looking beyond the conventional. Alternative investments — spanning stablecoins, private credit, distressed real estate, infrastructure, tokenised assets and more — are being viewed as one of the most promising avenues in 2025. In this article you will learn why alt-assets are gaining traction, which types are standing out (from stablecoins to distressed property), how to approach them, and what risks to watch. With up-to-date data, practitioner insights and actionable take-aways, this is your comprehensive guide to the alternative-investment opportunity.
What Are Alternative Investments and Why They Matter Now
Definition and Context
Alternative investments (or “alts”) refer broadly to assets that fall outside the typical categories of publicly traded stocks and bonds. They include private equity, private credit, hedge funds, infrastructure, real estate (especially non-listed), digital assets (such as stablecoins and tokenised real world assets), commodities, and other exotic vehicles. Preqin+3JPMorgan+3Yieldstreet+3
Why do they matter now? For several reasons:
- Traditional equity and bond markets face headwinds: elevated interest rates, inflation risk, stretched valuations.
- Many investors are searching for yield, diversification and low correlation to public markets. According to iCapital’s “Alternatives Decoded Q2-2025” report, private market strategies are projected to outperform over the next decade due to those features. iCapital
- The allocation to alternatives remains relatively low (around 15.2% of total assets under management, per J.P. Morgan) yet growth potential remains significant. JPMorgan+1
- Technological and regulatory shifts are making previously inaccessible assets (e.g., stablecoins, tokenised real estate) more accessible to a wider range of investors.
Why 2025 Is a Potential Inflection Point
- The macroeconomic backdrop: Sidelined equity returns, uncertain bond yields, geographic/regional shifts in supply chains and energy security are all driving interest in alternative assets. Elliott Davis+1
- Regulatory and structural changes: For example, the stablecoin sector is moving into the mainstream with new regulation and institutional interest. IMF+1
- Real estate and distressed assets are garnering attention as rates remain elevated and supply/demand dynamics shift. According to Yieldstreet’s “Top Alternative Trends for 2025” report, distressed real estate is a key theme. Yieldstreet
- The digital asset revolution is evolving: Stablecoins and tokenisation are not just fringe; they are becoming embedded in the financial ecosystem. For instance, stablecoins now represent a significant share of on-chain transaction volume. TRM Labs+1
These factors combined suggest that 2025 could mark a pivotal year for alternative investments.
Key Alternative Investment Themes for 2025
Stablecoins and Tokenised Assets
The rise of stablecoins is a striking example of how digital assets are entering the mainstream alternative-investment universe. According to a16z’s “State of Crypto 2025” report, in September 2025 some $772 billion in stablecoin transactions were settled on major chains (Ethereum and Tron) — accounting for 64% of all transaction volume on those chains. a16z crypto
Additional data: The combined market capitalisation of USDT and USDC rose from about $120 billion in 2021 to approximately $219 billion by mid-2025, an increase of over 82%. Cornell SC Johnson
Why this matters for investors:
- Stablecoins can serve as a bridge between digital assets and traditional finance — offering liquidity, transparency and programmability.
- As major payment networks and financial institutions explore stablecoin issuance and integration (see recent developments with the U.S. “GENIUS Act” regulatory framework) the opportunity set broadens. Wikipedia+1
- Tokenisation of real-world assets (real estate, art, infrastructure) is increasingly facilitated by blockchain networks — unlocking new segments of value and liquidity in alternative investments.
Key keywords to integrate: “stablecoin investment 2025”, “tokenised real world assets”, “digital asset alternatives”, “stablecoin market cap 2025”.
Distressed Real Estate and Real Assets
While much of the real estate market remains under pressure due to high financing costs and rate uncertainty, this scenario is creating opportunities in distressed assets and non-traditional real estate sectors. For example, according to Yieldstreet, some investors are targeting undervalued residential properties, data centres, logistics real estate and other real-asset classes tied to secular themes like AI/IoT and infrastructure. Yieldstreet
The logic: Elevated interest rates reduce traditional real estate returns, but also create a supply-side impact (e.g., fewer new builds, older assets available at discount) which can favour opportunistic investors. When combined with long-term secular tailwinds — such as digital infrastructure, energy transition, data centres — the upside potential becomes more compelling.
Keywords to use: “distressed real estate investing 2025”, “data-centre real estate alternative investment”, “real asset allocation alternatives”.
Private Credit, Infrastructure & Private Equity
Private credit continues to draw capital as investors seek yield outside the syndicated loan market. While performance has lagged public markets in some cases (J.P. Morgan noted U.S. private credit funds returned 8.3% in 2024 vs. higher public market yields) the structural need remains. JPMorgan+1
Infrastructure – particularly digital infrastructure (data, communications), energy transition (renewables, grid), transport/logistics – is another key area flagged for 2025. As macro themes shift (e.g., supply-chain recreation, reshoring, decarbonisation) the demand for infrastructure investment is increasing. Yieldstreet+1
Private equity remains under pressure: fundraising is down, returns have been muted compared with public markets. But that very dynamic, and the discounting of many assets, may offer entry points for strategic investors. McKinsey & Company+1
Keywords: “private credit opportunities 2025”, “infrastructure investing alternatives 2025”, “private equity valuations 2025”.
Access and Democratization of Alternatives
One of the big shifts in 2025 is that alternative investments are becoming more accessible to non-ultra-high-net-worth (UHNW) investors. Platforms, interval funds, tokenised vehicles, and fintech-driven models are opening the door. For instance, the 2025 “Trends in Investing Survey” from the FPA showed usage of non-traded REITs jumped from 9.6% to 14.2% among advisors in 2025. Financial Planning Association
The implication: Investors have more choice, but due diligence, fees, liquidity and transparency remain major considerations. Keywords: “retail access alternative investments 2025”, “fintech alt investment platforms”, “tokenised alternatives for retail”.
Why Now: Drivers Behind the Shift to Alternative Investments
Macro-Economic Pressures
- Elevated interest rates and central-bank tightening have squeezed bond yields and reduced the cushion for traditional portfolios.
- Equity markets face valuation and growth headwinds, prompting investors to look elsewhere. J.P. Morgan’s research highlights the underperformance of private equity in 2024 (7.3%) versus large-cap public equities (~25%). JPMorgan
- Inflation, geopolitics (supply-chain friction, reshoring, energy transitions) and regulatory change are all spurring investors to consider structural asset shifts. Elliott Davis
Structural and Technological Change
- Digital infrastructure needs (data centres, cloud, 5G/6G, IoT) create long-term demand for real assets beyond traditional real estate.
- Blockchain, tokenisation and stablecoins offer new ways to package, access and trade alternative assets. McKinsey notes 2025 may be the “inflection point” for tokenised cash and stablecoins. McKinsey & Company
- ESG (Environmental, Social & Governance) concerns are driving allocations into real assets, infrastructure and private markets aligned with sustainability goals. Yieldstreet
Portfolio Strategy Shifts
- The traditional 60 % equities / 40 % bonds portfolio is less effective in the current environment. Private market and alternative allocations can provide diversification, yield and idiosyncratic return sources. iCapital reports that many private market strategies offer higher yields and lower correlation to public markets. iCapital
- Advisors and wealth managers are increasing their use of alternatives: for example, Fidelity announced adding alternative investments to its model portfolios in 2025. Barron’s
Regulatory & Institutional Tailwinds
- The U.S. “GENIUS Act” (passed July 2025) created a regulatory framework for stablecoins and thus reduces a major barrier to broader institutional adoption. Wikipedia
- Real-asset and private-market firms are responding to demand by innovating accessible structures (e.g., interval funds, tokenised vehicles), making alternatives more “mainstream”.
- Increased transparency and reporting standards in alternatives (via new industry standards, surveys) are improving investor comfort. CAIA+1
Risks and Considerations: What Every Investor Must Know
Turning to alternatives doesn’t mean removing caution. Here are key risks to remain aware of:
Illiquidity and Access Costs
Many alternative investments are less liquid than stocks or bonds. Distressed real estate may take months or years to exit. Private credit may have lock-ups. Alternatives often carry higher fees. For example, Barron’s reported that model portfolios including alternatives may incur higher underlying fund fees. Barron’s
Manager Selection and Transparency
Returns in alternatives are highly dependent on the skill of the manager or sponsor. Lack of transparency, opaque structures and hidden fees can erode value. Notably, finance professor Aswath Damodaran warned about red flags: disappointing returns, lack of transparency, illiquidity and complexity in alt-assets. The Economic Times
Valuation and Market Cycles
Just because an asset is “alternative” doesn’t guarantee higher returns. Private markets may lag until the cycle turns. For example, private equity fundraising and returns have been muted recently. McKinsey & Company+1
Regulatory & Technological Risks
Digital assets like stablecoins have regulatory and systemic-risk implications. For instance, academic work highlights run-risk in stablecoin systems and liquidity issues under stress. arXiv In real estate or infrastructure, regulatory changes, tax reforms or unexpected policy shifts can affect value.
Allocation and Portfolio Fit
Investors must assess how much to allocate to alternatives relative to their time horizon, risk tolerance and liquidity needs. Alternatives should complement, not replace, core holdings. Landsberg Bennett emphasises understanding one’s goals and matching the right alt‐asset to the investor. Landsberg Bennett
How to Incorporate Alternative Investments Into Your Portfolio
Here’s a roadmap for investors considering alternative exposure in 2025.
1. Define Your Objective and Time Horizon
Are you seeking yield, growth, diversification, inflation hedge, or a combination? Do you have a 5-year, 10-year, or longer horizon? Illiquid assets may not fit if you need near-term access.
2. Choose the Right Alternative Segments
Based on your objective, pick the types of alternative assets:
- For liquidity and digital access: Stablecoins / tokenised assets.
- For growth and opportunistic returns: Distressed real estate, private equity.
- For income and diversification: Private credit, infrastructure, real assets.
3. Access and Platform Considerations
Explore platforms and vehicles appropriate for your situation:
- Use interval funds, tokenised platforms, or crowdfunded structures for smaller-ticket access.
- For stablecoins: consider regulated issuers, custody risk, reserve transparency.
- For real estate/infrastructure: examine structure, fees, exit strategy, sponsor track record.
4. Risk Management & Due Diligence
- Scrutinise fees, liquidity terms, valuation methodology.
- Understand manager track record and transparent reporting.
- Consider diversification across multiple alternative segments to avoid concentration risk.
- Maintain a core allocation to traditional assets; alternatives should complement, not dominate.
- Monitor macro and regulatory developments that could impact value.
5. Allocate and Monitor
- Begin with a modest allocation (eg. 5-15 % of portfolio) and scale as you gain experience.
- Set review cadence (e.g., semi-annually) and track performance relative to objectives.
- Re-visit your allocation strategy if liquidity needs, risk tolerance or market conditions change.
Spotlight Case Studies & Data Highlights
Stablecoins – Rising Prominence
- According to Chainalysis’ 2025 Global Adoption Index, USDT regularly processed roughly US$703 billion per month between June 2024 – June 2025, peaking at US$1.01 trillion in June. Chainalysis
- McKinsey’s research notes that 2025 may be an inflection point for stablecoins: “tokenised cash” is gaining fewer headwinds and more institutional interest. McKinsey & Company
- The GENIUS Act in the U.S. (July 2025) creates regulatory clarity, which is expected to accelerate institutional uptake of stablecoins.
Distressed Real Estate & Real Assets
- Yieldstreet identifies undervalued residential and other real-asset sectors as areas of opportunity in 2025. Yieldstreet
- Smaller deals in data centres, logistics real estate and infrastructure are benefitting from secular tailwinds (AI, cloud, supply-chain reshoring) and may outperform older, commoditised real-estate segments.
Advisor/Industry Behaviour
- The 2025 Trends in Investing Survey (FPA) revealed a substantial increase in alternative allocations: non-traded REITs usage rose ~47% year-over-year; private debt use up ~55%. Financial Planning Association
- Fidelity’s June 2025 announcement: adding alternative investments to model portfolios for advisors; model-portfolio assets under advisement reached US$646 billion (up 62% since June 2023). Barron’s
These case studies demonstrate how alternative investments are not just theoretical—they are already being embraced by both advisors and assets managers, supported by data and institutional flows.
What Makes Alternative Investments Stand Out This Year?
Here are the standout reasons why alternatives are getting so much attention in 2025:
- Low correlation to traditional equities/bonds: Many alt-assets behave differently, offering diversification.
- Yield and income opportunity: With public-market yields under pressure, private credit, infrastructure and real assets may offer better risk-adjusted returns.
- Structural tailwinds: Technology, digitalisation, tokenisation, real assets tied to AI/IoT, stablecoins—these are structural themes, not just cyclical.
- Access and democratization: Better access for non-institutions through fintech platforms, tokens, fractionalisation.
- Regulatory clarity & legitimacy: Especially in digital assets, improved regulation (e.g., stablecoins) reduces a major barrier.
- Discounted entry points: In segments like distressed real estate or private markets, elevated risk is opening up potential bargains for investors with toleration and time horizon.
Key Metrics & Data to Monitor
Here are some critical metrics and data points worth watching as you evaluate alternative investments:
- Allocation to alternatives as percentage of AUM (e.g., ~15.2% per J.P. Morgan) JPMorgan
- Fundraising flows in private markets (e.g., private-equity fundraising down ~24% YoY per McKinsey) McKinsey & Company
- Stablecoin transaction volumes and market-cap growth (219 billion combined USDT/USDC by mid-2025) Cornell SC Johnson
- Advisor adoption statistics (e.g., usage of non-traded REITs, private debt) Financial Planning Association
- Real-asset price vs yield dynamics (e.g., distressed real-estate spreads, data-centre cap-rates)
- Regulation/macro events (e.g., stablecoin regulation, interest-rate shifts, geopolitical supply shocks)
Practical Steps: How to Get Started with Alternative Investments
- Educate yourself — Understand the asset class, structure, fees, liquidity terms and how alternatives fit your plan.
- Evaluate platforms and vehicles — Research interval funds, funds-of-funds, tokenised real-estate vehicles, private-credit opportunities. Ensure transparency, credible sponsors, clear exit strategy.
- Start small — If you are new to alternatives, begin with a modest allocation (for example, 5-10%) and monitor how it behaves.
- Monitor liquidity & fees — Ensure you are comfortable with the exit-terms (lock-ups, redemption windows), and understand fee structure (which often is higher than public funds).
- Remain diversified — Avoid putting all alternative exposure into one segment. Mix stablecoins/tokenised assets + real-assets + private credit/infrastructure as appropriate to your risk profile.
- Stay updated on regulation — Especially if you venture into digital-assets or tokenised real-estate. Regulatory shifts can materially affect value and liquidity.
- Re-assess periodically — As market conditions change, liquidity needs evolve, or your time horizon shifts, revisit allocation and exposure.
Conclusion & Call to Action
As we look ahead to the remainder of 2025 and beyond, alternative investments stand out as one of the more compelling opportunities for investors seeking yield, diversification, and exposure to structural themes beyond the public markets. From the rapid growth of stablecoins and tokenised real-world assets to the emerging chances in distressed real estate, private credit and infrastructure, the alternative-investment landscape is evolving fast.
However, the benefits come with unique risks: illiquidity, manager selection, regulatory uncertainty and higher fees. That means investors need to approach thoughtfully, allocate strategically, and remain disciplined in their due diligence.
Your takeaway: If you haven’t reviewed alternatives recently, make 2025 the year you do—evaluate how much ‘alt’ exposure fits your portfolio, identify suitable segments, start modestly, and monitor closely. The opportunity is significant—but preparation and prudence will determine who succeeds.
Call to Action: Start by picking one alternative segment (for example, stablecoins or tokenised real estate) to research further this week. Investigate fees, liquidity, track record and regulation. Then decide whether to allocate a portion of your portfolio to that segment. Visit our blog next week for deep-dives into each alternative segment and step-by-step guides for implementation.
