Fast-growing Global Alternative Investment Market Scale
Unit: trillion
7.9
2.5
2004
5.3
2007
2013
13.6 - 15.3
2020
As of the end of the year, 2020 is a prospect
Data: PwC
NTF Investment Market Prospect
It can solve the problems of the traditional investment market.
The investment market has currently a high barrier to entry to access for ordinary individuals.
(The problem of limited investment market in products and low liquidity)
The minimum investment increases as the price of stocks and real estate rises due to currency inflation. Due to currency inflation, the more the price of stocks and real estate rises, the more the minimum investment increases. Even though ordinary individuals have gradually been alienated from the investment market as they become more difficult to access, they will be able to participate in the investment market with a small sum through fractional investment platform.
This allows to invest in new alternative investment products such as real estate, luxury items, art works, and copyright in various ways, away from existing investment products limited to deposits, real estate, and stocks. In addition, investment products in commercial real estate or expensive art that lacked liquidity increase liquidity through the fractional investment platform, so it can smooth sale and profits after sale.
Even at this moment, the investment method of the MZ generation is evolving. What is needed is an investment platform commensurate with this. Through the growth of the NFT investment platform that deals with various investment products, it can encompass alienated investors and the MZ generation. With stable investment returns and low entry barriers, the fractional investment platform will lead the investment trend and establish a new ecosystem.
The Fourth Industrial Revolution, represented by Information and Communication Technology, is based around technological innovation and creative ideas. Especially, the need to foster investment industries has become important in order to buildup convergence and integration, new technologies, and competitiveness.
Alternative investment products exist in a wide variety. According to AIMA, it has a high proportion in the order of 17% of real estate, 13% of private equity debt, 10% of natural resources, and 8% of infrastructure based on Private Equity Fund(PEF) investment in 2017. Hedge Fund that recently actively invest in virtual currency are also on the increase.
Alternative investments have the advantage of a high return compared to bond investments and a low risk compared to stock investments. Based on this advantage, alternative investments have grown explosively started the 2008 financial crisis. According to a report by PWC, a global consulting company, the alternative investment market expanded from $7.9 trillion in 2013 to $15.3 trillion in 2020.
Variability
Due to the pandemic, the global stock market came and went between heaven and hell.
Precious metals including gold do not lose their value, and real estate provides much higher returns than the stock market depending on the circumstances. Alternative assets have a feature of low correlation with the stock market.
Stock market bubble
Global stock markets have been in a rising rally since the pandemic.
DOW, S&P 500 and NASDAQ, the three major indexes of the U.S. stock market, reached a record high. Concerns over a stock market bubble lead to a decline in expected returns in the future.
The U.S. government bond yields is currently below inflation. Even interest rates on government bonds in some developed countries in Europe are in negative territory. This environment darkens the prospect for the bond market.
Low-interest environment
Technological progress
Alternative investments in the past was the exclusive property of institutional investors and high-value assets. The entry barrier for individual investors was high because there were many cases where huge investments and expertise were needed in the beginning. But, as technology advances and investment platforms emerge, the barriers to entry to alternative investments have been lowered.
Investor Propensity
According to a survey result by the 'Univ Tomorrow Research Laboratory,' 61.4 percent of MZ generations take an active interest in investments and financial techniques. As never before, the trend of low interest rates continues and the trend that class mobility is impossible only with earned income spreads, so they are expanding a field of value investment not only domestic stocks but also overseas stocks, virtual currencies, and real estate and, furthermore, artworks, limited edition sneakers, arts, and figures. The finance pursued by the MZ generation must be fast, convenient, and highly accessible. Small investment and diversified investment should be possible. The Financial Technology of Chanel, which resells expensive luxury bags, has been changed to Snickers Tech, which resells at a more expensive price to the resell market after purchasing limited edition sneakers.
The investment craze of the MZ generation led to a fractional investment in which expensive assets are divided and invested by 1/n. It is hard to invest expensive artworks and real estate by oneself, but the fractional investment makes this possible. As fractional investment platforms and related technologies develop, the development possibility of alternative and small investments instead of traditional financial products becomes endless.
According to the UBS '2021 Art Market Report,' more than half of the 'big investors' in the art market are in their 20s and 30s, and are gradually invested in real estate or alternative investments. Among the 250,000 collectors who have more than $1 million (about 1.1 billion won) in assets with arts-purchased, 52 percent are the MZ generation. Also, the proportion of online transactions in 2020 was 25 percent, surging nearly tripled compared to 9 percent year-on-year.