The Role of Alternative Investments in Modern Portfolio Diversification

Abstract

This study investigated the role of alternative investments in modern portfolio diversification among investors in Lagos State. A descriptive survey design was employed, with a sample of 300 investors, portfolio managers, and financial analysts. Data was collected via a structured questionnaire and analyzed using descriptive statistics and ANOVA. The findings reveal that alternative investments have a significant and positive impact on portfolio diversification, aligning with established financial theories. However, the study found no statistically significant influence of alternative investments on portfolio returns among the respondents, nor did it find that acknowledged challenges (such as complexity and illiquidity) significantly deter their use. This suggests that the perceived diversification benefits of alternative investments outweigh their challenges for investors in this region, even if the anticipated return enhancements are not yet statistically realized.