What Are Alternative Investments – And Why Are More Investors Choosing Them?

Alternative investments have seen a notable rise in interest over the past decade, particularly among investors looking to diversify away from traditional markets. While the term itself can cover everything from private equity to fine art, at Level Investments we focus on a more tangible, accessible segment of the alternative space.

Structure investment opportunities that offer fixed returns over defined terms and are typically backed by real assets, such as residential or student property developments. For investors seeking greater predictability in their portfolios, this can be a compelling proposition.

What are property bonds and loan notes?

Property bonds are among the most widely recognised forms of alternative fixed-income investments. At their core, these are debt instruments that allow investors to lend money to property developers in exchange for regular interest payments. These bonds are often secured against the underlying asset such as land or property, which can provide an additional layer of comfort and protection. In return, investors receive a pre-agreed rate of interest, typically over a period ranging from 12 to 36 months.

Loan notes operate in a similar fashion, offering defined returns over set terms, but they tend to be more flexible in how they’re structured. These can include options for monthly interest payments, annual payouts or rolled-up returns payable at maturity. Like property bonds, loan notes are generally backed by the developer’s asset, giving investors both transparency and security in the structure.

Developer finance: bridging the funding gap

Developer finance is another important part of the alternative investment space, providing funding for projects at various stages of the development cycle. This type of finance helps bridge the gap between initial capital requirements and traditional bank lending. By investing directly into these structured finance products, investors can participate in the growth of the property sector while benefiting from fixed, contractually agreed returns.

Why investors are making the shift

So why are more investors turning to these options?

Firstly, it’s about control. Traditional investments such as shares, funds or even buy-to-let property are subject to market forces, liquidity challenges or management demands that are often out of the investor’s hands. Alternative fixed-income products like bonds and loan notes offer a defined route from start to finish, with a known rate of return and a clear exit.

Secondly, they offer diversification. Many of our clients come to us with existing portfolios in place but are looking for something that offers non-correlated performance to equities or cash-based holdings. Alternatives like developer-backed bonds provide a way to spread risk and strengthen portfolio resilience.

And finally, there’s simplicity. When structured properly, these investments are straightforward. At Level, we’re focused on presenting opportunities that are transparent, secure and easy to understand. We work directly with experienced developers and conduct rigorous due diligence to ensure every project aligns with our standards and our clients’ expectations.

A valuable addition to the modern portfolio

As alternative investments continue to gain traction, we believe they’ll play an increasingly valuable role in well-rounded portfolios. If you’re considering diversifying your approach to fixed income, we’re here to help you explore what’s possible.

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