NYHFR Survey Finds Marijuana, Sports Teams Among Most Appealing 'Alternative' Alternatives

May 30 2017 | 11:22pm ET

The alternative investment community is a fan of marijuana, at least from an investment perspective, along with art, jewels, wine, sports teams and other “alternative” opportunities, according to a new survey by the New York Hedge Fund Roundtable. 

“Alternative” alternative investments was the topic of the Roundtable’s May event, where speakers on a panel moderated by Galerie Magazine executive editor Alexandra Peers weighed in out-of-the-box ideas attractive because they do not correlate with the general marketplace.

“From art, to sports teams and medical marijuana, there are several non-traditional areas outside of those typically focused on by the alternative investment industry that offer the prospect of very attractive returns,” said Adam Weinstein, president of the New York Hedge Fund Roundtable, in a statement.

Roundtable members believe that marijuana is an attractive investment option for the alternative investment community, with 77% of respondents indicating that, given the rising number of state embracing marijuana usage – both medically and recreationally, it is an area they would consider investing in. Those who remain on the fence about investing in marijuana are concerned about the fact that there is no guarantee that the federal government will ultimately legalize cannabis.

Other key findings include:

  • When asked to identify which “alternative” alternative investments they believe has the potential for the greatest returns, 55% of respondents think it is marijuana; 18% said sports teams; 14% think it is art; 9% believe it is wine; and 4% think it is jewels.
  • Asked where the greatest potential gains from investing in marijuana are for the alternative investment community, 78% of respondents think that investment in U.S.-based cannabis operations are most attractive, given the tremendous growth opportunity for these companies as more and more states approve medical marijuana; 22% of respondents think cannabis stocks in Canada, Australia and certain countries in Europe where medical marijuana is legal have the greatest potential.
  • 59% of respondents think the biggest benefit of investing in art is the possibility of high returns that are not correlated to the general financial market; while 41% of respondents think investing in art is attractive given that its cyclical nature means there will always be opportunities to pick up individual pieces of art from specific artists or styles that have fallen out of favor, but which are likely to eventually become popular again.
  • Asked what they believe the biggest risk of investing in art is, 41% of respondents believe it is the illiquidity of the art market, which means that the true value of an individual piece can only be determined when it is sold; 32% said the fact that the art market is extremely cyclical and that the changing taste of buyers makes it extremely difficult to identify which individual pieces will significantly rise in value over any 5-10 year period; 18% think it is the fact that the art market is unregulated; and 9% think the fact that there is no standardized value for individual pieces of art makes the value of individual pieces entirely too subjective.
  • Asked if investing in a sports team is an attractive prospect for the alternative investment community, 52% of respondents think it is given that sports teams have no correlation to the general market, yet tend to remain popular despite what the overall economy is doing; 48% do not like the idea of investing in sports teams given that an individual team’s success and popularity is too heavily dependent on the performance of individual players.

Each NYHFR survey includes an interesting bonus question, which this month asked if the federal government would legalize marijuana within the next 10 years. 64% of respondents believe it will, while 36% believe it won’t.

Of the respondents to this survey, 36% were fund managers; 21% were allocators; 12% were risk management or trading; 24% were service providers; and 7% were other industry participants.

The New York Hedge Fund Roundtable is a non-profit organization focused on promoting ethics and best practices within the alternative investment industry. The membership consists of investors, fund managers and other industry professionals who regularly meet to discuss current issues within the industry and connect with peers.


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