Best Alternative Investment Funds UK – Invest with Zero Fees

Many investors in the UK are turning to alternative asset classes as a means to target higher financial returns. As alternative investments are considered to be riskier than traditional assets like blue-chip stocks and bonds – it’s a good idea to consider a diversified fund.

In this guide, we review the Best Alternative Investment Funds UK and show you how you can gain exposure to this marketplace without paying any trading commission.

Best Alternative Investment Funds UK List

Check out the best alternative investment funds UK below. if you don’t have time to read this comprehensive guide in full. We review each fund in great detail further down.

  1. SPDR Gold ETF – Best Alternative Investment Fund UK for Gold – Invest Now
  2. Real Estate Select Sector SPDR Fund – Best Alternative Investment Fund UK for Real Estate Invest Now
  3. Vanguard Emerging Markets Index – Best Alternative Investment Fund For Emerging Markets – Invest Now
  4. NewRiver REIT– Best REIT Alternative Investment Fund UK
  5. eToro CryptoPortfolio – Best Alternative Portfolio to Invest in Cryptocurrencies

Best Alternative Investment Fund to Invest in Reviewed

In choosing the best UK alternative investment funds for your financial goals – there are many considerations that need to be made.

For example, what type of alternative investments will your chosen fund provider give you access to and what fees does it charge. You also need to consider past performance and how much risk is involved with the alternative investment fund in question.

Taking these considerations into account, below we discuss the best alternative investment fund UK for 2021.

1. SPDR Gold ETF – Best Alternative Investment Fund UK for Gold

The first alternative investment fund that you might want to consider is that of the SPDR Gold ETF. As the name suggests, this alternative investment fund is focused exclusively on gold. This is a classic example of an alternative asset – as you will be investing in a market outside of traditional stocks and bonds.

This alternative investment fund is backed by physical gold – meaning that your capital will reflect the global market price of this precious metal. That is to say, if gold increased by 10% in the space of four weeks – as will your investment. Like all of the best ETFs, there will always be a slight variation between market growth and investment returns – as you need to take into account fees.

SPDR GOLD ETF at eToro

With that said, this alternative investment fund is one of the cheapest in the UK market – with SPDR charging just 0.40% per year. This means that a £5,000 investment would cost you just £20 annually in fees. You don’t need to invest this much when going through eToro though – as the FCA broker has a minimum ETF investment requirement of just $50 (about £35).

In terms of past performance, this alternative investment fund has mirrored the global value of gold pretty much like for like since its inception in 2004. For example, the spot price of gold has increased by 9.76% in the three years prior to writing this page. In comparison, the SPDR Gold ETF has grown by  9.32%.

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Real Estate Select Sector SPDR Fund – Best Alternative Investment Fund UK for Real Estate

Real estate is another great option when it comes to alternative investments. As a retail investor, the best way to access this marketplace is via an alternative investment fund. In particular, we like the look of the Real Estate Select Sector Fund offered by SPDR.

In a nutshell, this alternative investment fund will allow you to gain exposure to various US real estate markets. In fact, the fund itself contains 29 large-cap stocks that are directly involved in the American property industry. This covers multiple sectors – such as commercial property, essential units, office blocks, retail space, and healthcare facilities.

The Real Estate Select Sector SPDR® Fund

To give you an idea of how this alternative investment fund is balanced – 12% and 9% holding in American Tower Corporation and Prologis, respectively. There are also holdings in Welltower, Simon Property Group, Digital Realty Trust, and Equinix. Although you are gaining access to a wide variety of real estate stakeholders – SPDR charges just 0.12% per year on this fund.

This allows you to diversify into the US property scene without getting hammered by expense commissions. In terms of past performance, this alternative investment fund has generated some attractive returns since it was launched in 2015. This works out at an average annualized return of 7.81%. 3-year returns are even more favorable at 11.12% annually.

67% of retail investor accounts lose money when trading CFDs with this provider.

3. Vanguard Emerging Markets Stock Index Fund – Best Alternative Investment Fund UK to Access the Emerging Markets

Although stocks listed in the UK, US, Europe, and other major markets are not considered an alternative investment – this is most definitely the case with equities based in the emerging economies. After all, you will be gaining exposure to companies that operate in high-growth marketplaces – so both the risks and rewards are going to be much higher.

If you like the sound of allocating some capital to Asia, South America, Africa, and other illiquid markets – there are several alternative investment funds to choose from. With that said, we like the look of the Vanguard Emerging Markets Stock Index Fund for its diversified approach.

vanguard Emerging Markets Stock Index

Put simply, this Vanguard fund will get you access to over 1,400 companies from a variety of regions and economies. In the Asian markets, this includes everything from China, the Philippines, Indonesia, Thailand, Malaysia, South Korea, India, and Taiwan. In South Africa, you’ll be gaining access to companies in Brazil, Chile,  Colombia, and Peru.

There are also stock holdings in the Middle East, Africa, and a number of emerging European states – like Hungary. Although Vanguard gives you access to dozens of emerging economies – you might be surprised to learn that the expense ratio on this alternative investment fund is just 0.23% per year.

Vanguard has appointed a risk rating of 6/7 on its Emerging Markets Stock Index Fund – so you are best advised to keep your stakes conservative. In terms of performance, returns have been significant since the fund was launched in 2009. This works out at cumulative total gains of 174% – and 100% over the past five years alone.

67% of retail investor accounts lose money when trading CFDs with this provider.

4. NewRiver REIT- Best REIT Alternative Investment Fund UK

NewRiver is behind a real estate investment trust (REIT) – which firmly sits within the category of an alternative asset class. This is because the firm will invest in UK-based properties from within the retail sector. In fact, NewRiver also develops new projects and manages the end-to-end process of vetting tenants and collecting rental payments.

At the time of writing, this alternative investment fund is behind a real estate portfolio in excess of £1.4 billion. This includes a variety of pubs and bars, shopping centers, warehouses, and high-street shops. Although the UK retail sector is still in dire straights as per the impact of the pandemic – this investment fund has performed well in recent months.

NEWRIVER REIT PLC

For example, in the six months prior to wiring this page – the fund was priced at £50.60 on the London Stock Exchange. And today – the same fund is priced at £93.80. This translates into 6-month returns of over 85%. This alternative investment fund is also great for those of you seeking regular income – as NewRiver distributes a dividend payment every three months.

Note: This alternative investment fund is listed on the London Stock Exchange. As such, you will need to pay a 0.5% stamp duty tax when you make a purchase. If, however, investing via FCA broker eToro – the stamp duty tax is waivered. 

67% of retail investor accounts lose money when trading CFDs with this provider.

5. eToro CryptoPortfolio – Best Alternative Portfolio to Invest in Cryptocurrencies

Much like real estate, gold, fine art, and emerging market equities – cryptocurrencies are a popular alternative asset class with UK investors seeking above-average returns. The key problem is that digital currencies operate in a highly speculative and volatility-driven market, so the risks are considerable.

This is why it is worth considering a diversified portfolio that is managed by an experienced third party. In our view, the best option on the table in this respect is eToro’s ‘CryptoPortfolio’. As the name suggests, this consists of a diversified portfolio of crypto assets. Most importantly, the portfolio is professionally managed by eToro – so you can invest in a 100% passive nature.

cryptoportfolio etoro

Look at the CryptoPortfolio in more detail, we can see that 25% is allocated to Bitcoin – which is still the de-facto digital coin of choice. There are also holdings in Ethereum, Cardano, IOTA, NEO, ZCash, Litecoin, Bitcoin Cash, Stellar Lumens, and more. The team at eToro will look to reweight and rebalance the portfolio in line with market conditions.

That is to say, there is more allocation of capital to cryptocurrencies with a higher market valuation. The best thing about the CryptoPortfolio at eToro is that there are no fees or commissions charged. The main drawback is that you need to meet a minimum investment o $5,000 (about £3,500). Crucially, the CryptoPortfolio has generated returns of 478% over the past 12 months.

67% of retail investor accounts lose money when trading CFDs with this provider.

What are Alternative Investment Funds?

Alternative investments are generally considered to be asset classes outside of the traditional stock and bond markets. There are many examples that fall within the remit of an alternative investment – such as real estate, interest rates, private equity startups, hedge funds, gold, silver, and futures. Additionally, alternative investments can also include digital currencies like Bitcoin, fine art, and even rare whiskeys.

The key attraction of alternative investments is that they often allow you to target above-average returns. Additionally, many alternative investments – such as cryptocurrencies and fine art – have no correlation to the health of the wider stock markets.

bitcoin alternative investment

This allows you to diversify your portfolio and avoid being overexposed to a potential market crash.  With that said, alternative investments carry much more risk than conventional bonds and blue-chip stocks.

This is why it’s a good idea to consider an alternative investment fund – as opposed to selecting individual assets yourself. In doing so, your chosen asset management team will determine which alternative investments to make on behalf of its private investors. Plus, it’s likely that the fund will be well-diversified – which further mitigates your long-term risk.

Are Alternative Investment Funds a Good Investment?

By investing in an alternative fund, you must understand that both the risks and potential rewards are often much higher in comparison to traditional assets. Nevertheless, there are several benefits to allocating some capital to the best alternative funds UK – which we elaborate on below.

Target Higher Financial Returns

Perhaps the main reason why investors in the UK are turning to alternative investments is that offer they offer the potential to generate higher financial returns. This is because the underlying risks and higher.

If you take Bitcoin as a prime example, this innovative digital asset has generated gains of over 782% in the 12 months prior to writing this page.

Of course, Bitcoin could just as easily drop in value by a double-digit percentage in the space of a few weeks – like it has done many times since its inception in 2009. Other high-yield assets in the alternative investment fund scene of recent times include emerging market equities and fine art.

Hedge Against Stock Markets

In many cases, there is no correlation between alternative asset classes and the traditional stock markets. That is to say, if the stock markets are performing badly – there is no reason that this will also be the case for an alternative asset fund that tracks gold or real estate. As such, this allows you to hedge your exposure to the wider stock markets.

Instant Diversification

The best alternative investment funds UK ensure that they are well-diversified. Sure, they might be involved in assets that are perceived to carry a higher amount of risk. But, ensuring that the fund is diversified across dozens of different financial instruments and markets – reduces the long-term risk.

For example, the previously discussed Vanguard Emerging Markets Stock Index Fund is exposed to higher-risk markets in the form of the emerging economies. However, by investing in over 1,400 individual stocks from a variety of countries and continents – the risks are mitigated.

Low Fees

Another benefit of allocating capital into the best alternative investment funds UK is that generally speaking – fees are actually very competitive. As we discussed earlier, you will often pay in the region of 0.1% to 0.3% annually. This is even the case for alternative investment funds that target difficult-to-reach markets – such as the emerging regions.

On the other hand, if you were to attempt to invest in alternative assets on a do-it-yourself basis, it is all but certain that the fees involved would be high. This is because you don’t have access to the same level of resources as institutional investors and large-scale investment funds.

Best Alternative Investment Funds UK Brokers

In order to invest in the best UK alternative investment funds from the comfort of your home – you will need to do this through a trusted stock broker. There is a good selection of trading platforms in the UK that offer such a service – albeit, you need to focus on key metrics like fees, commissions, supported markets, and regulatory bodies.

To save you from countless hours of research  – below you will find the best providers in the UK that allow you to trade alternative funds.

1. eToro – Buy the Best Alternative Funds UK with 0% Commission

etoro logo

eToro offers a huge selection of the best alternative investment funds – many of which we have discussed on this page. For example, you can easily invest in the SPDR Gold ETF, Real Estate Select Sector SPDR Fund, and the Vanguard Emerging Markets Stock Index Fund at the click of a button.

This top-rated brokerage site is now home to over 20 million investors – not least because it allows you to gain exposure to the financial markets in a super low-cost manner. In fact, eToro is a commission-free trading platform – so you can buy and sell investment funds without paying any dealing fees. Additionally, if the alternative investment fund is listed on the London Stock Exchange, eToro waivers stamp duty tax.

This saves you an additional 0.5% on your investment – which is great. A further benefit of choosing eToro to invest in alternative funds is that the minimum stake is just $50. As such, an account balance of $500 would allow you to invest in 10 different alternative investment funds – ensuring that you are well-diversified. eToro is also behind a popular CopyPortfolio that gives you access to the cryptocurrency industry.

The fund contains a wide variety of digital coins that are weighted based on recent performance and market capitalization. The CopyPortfolio in question has generated returns of over 478% in the last year and eToro charges no commissions or fees. To get started at eToro, you’ll need to quickly open an account and deposit some funds with a debit/credit card, e-wallet, or bank account transfer. eToro is authorized and regulated by the FCA and your capital is covered by the FSCS scheme.

etoro alternative investments UK

We should also note that eToro offers a lot more than just alternative investments. On the contrary, the platform gives you access to over 2,400 shares from 17 UK and international stock exchanges. You can also invest in more than 250 ETFs and 16 digital currencies. If you’re an experienced investor, you might also be interested in trading hard metals, CFD futures, energies, forex, and indices. All of the aforementioned markets are also commission-free at eToro.

Pros:

  • Super user-friendly online trading platform
  • Buy stocks without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 2,400+ stocks listed on the UK and international markets
  • 150+ ETFs
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis
  • No ISAs or SIPPs

67% of retail investors lose money when trading CFDs at this provider

2. Capital.com – Best CFD Broker to Trade Alternative Investment Funds

new capital.com logo

Alternative investment funds typically operate in volatile market conditions – making them ideal for short-term traders. At Capital.com, you can trade a wide variety of alternative asset funds via CFD instruments. This top-rated CFD broker does not charge any trading commissions and spreads are often industry-leading.

For example, you can trade the SPDR Gold ETF at Capital.com at a spread of just 0.65%. In addition to low-cost markets, Capital.com is also great for leverage. For example, most alternative investment funds supported by the CFD broker can be traded at leverage of 1:5. This means that you can amplify your trading capital by a factor of 5x. If you meet the requirements of a professional client, Capital.com will offer you even higher limits.

capital.com alternative investments

On top of the best alternative investment funds UK, Capital.com is home to thousands of other marketplaces. All in the form of CFD instruments, this includes stocks from almost 20 UK and international markets, ETFs, commodities, forex, indices, and more. The minimum deposit at this trading site is just £20 – which is ideal if you are thinking about trading leveraged CFDs for the first time. There is also a demo account facility offered by the platform alongside heaps of educational resources.

Pros:

  • Educational app for new traders
  • Commission-free trading
  • Tight spreads
  • Leverage offered
  • AI assistant identifies your weak points
  • Excellent charting and analysis interface
  • £20 minimum deposit

Cons:

  • Cannot build custom investment strategies
  • CFDs only

71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

How to Invest in Alternative Investment Funds on eToro Tutorial

Ready to start investing in the best alternative funds right now? If so, the steps below will show you how to invest at an FCA-regulated broker without paying a single penny in commission or stamp duty! You can also do this on the best investment apps.

Step 1: Open an Account and Upload ID

Head over to the eToro homepage and begin the registration process. You will be asked to provide a range of personal information - such as your name, home address, National Insurance Number, email, and mobile number.

eToro sign up

67% of retail investors lose money when trading CFDs at this provider

eToro will send a code to your phone via SMS - which you will then need to verify on-screen to complete the registration process.

Step 2: Confirm Identity

You can skip the KYC (Know Your Customer) process to a later date if you are not planning to deposit more than $2,250 (about £1,600) right now.

But, as this needs to be done before you can request a withdrawal - it's best to quickly confirm your identity now. All you need to do is upload a copy of your government-issued ID (passport or driver's license) and a proof of address (utility bill or bank account statement).

Step 3: Make a Deposit

You will now need to deposit some funds into your newly created eToro investment account.

You can do this via the following payment types:

  • Debit/Credit Card (Visa, MasterCard, Maestro)
  • Paypal
  • Skrill
  • Neteller
  • UK Bank Transfer

Step 4: Search for Alternative Investment Fund

Now that your eToro account has been credited, you can invest in your chosen alternative fund. The easiest way to do this is to use the search box at the top of the page.

etoro Alternative Investment Fund

67% of retail investors lose money when trading CFDs at this provider

As you can see from the above, we are searching for the 'SPDR Gold ETF'.

Step 5: Place an Order

Once you have found the alternative investment fund that you wish to purchase - click on the 'Trade' button. An order will then appear on-screen.

etoro Alternative Investment Fund

Simply enter your stake (in USD, minimum $50), and click on the 'Set Order' button to complete your commission-free investment!

eToro - Buy the Best Alternative Investment Funds UK with 0% Commission

This guide has covered the many benefits of allocating some capital into an alternative investment fund. Not only will you be able to hedge your investments against the traditional markets, but alternative asset classes offer the potential of above-average returns. Plus, when opting for an alternative investment fund - you'll have access to a diverse portfolio of financial instruments.

If you're ready to purchase your chosen alternative investment fund right now - eToro allows you to do this without paying any commission or stamp duty. The minimum investment per fund at this FCA-regulated broker is just $50 and the end-to-end process should take you no more than 10 minutes!

etoro logo

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

What are the best alternative investments UK?

There are many alternative investments to choose from - so you need to consider what your financial goals are and how much risk you feel comfortable taking.

What are alternative investments?

In its most basic form, alternative investments are assets outside of the traditional stock and bond markets. This can include anything from real estate, venture capital, private equity, and hedge funds, to cryptocurrencies, peer-to-peer lending, and futures trading.

Who can invest in alternative investment funds?

Anyone in the UK can invest in an alternative investment fund. In most cases, these are backed by ETFs - meaning that you can invest by using a UK broker. At eToro, you can invest in the best alternative investment funds without paying any commission.

Are alternative investments high risk?

In most cases, alternative investments are considered higher risk. This is especially the case when you consider how volatile assets like gold, Bitcoin, and emerging market stocks are. With that said, some alternative investments come with much lower risk levels - such as US/UK real estate.

Is gold an alternative investment?

Yes, gold is considered an alternative investment - even though it has held its own for thousands of years. This is largely because gold sits outside of the traditional stock markets and thus - it offers an alternative investment route for those looking to hedge.

 

 

 

About Kane Pepi PRO INVESTOR

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.

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