Failed Sotheby’s auction of US$70 million bronze bust leaves bidders speechless, art insiders stunned — here’s how the jaw-dropping turn of events unfolded

This high-profile flop highlights some of the risks of investing in alternative assets such as art and collectibles. According to Deloitte ultrawealthy families across the world have allocated roughly 13.4% of their assets to artwork and collectibles, on average. Unfortunately, the art and collectible market is a tough asset to store wealth. These markets are notoriously opaque and illiquid, meaning many of these collectibles cannot fetch the high resale price that owners expect.

Investors looking to diversify using alternative assets don't need to rely on an illiquid asset, such as fine art. Instead, consider these three alternative assets that can offer more attractive investment returns than ancient sculptures or oil on canvas.

Alternative asset #1: Gold

Gold has been around longer than any piece of ancient art and its collectors include central banks and sovereign nations. The market for this precious metal is also much more transparent and robust.

Gold’s reputation as an uncorrelated, safe haven is well known among investors — and the reliance on the market to gravitate to this precious metal has only been cemented in recent months. As President Donald Trump’s ongoing trade war whips up volatility in stocks, bonds and cryptocurrencies, the price of gold has surged roughly 25% over the past six months.

For investors, adding exposure to precious metals is a good idea, particularly if you’re worried about economic growth, inflation or interest rate volatility over the medium- to long-term.

Alternative asset #2: Real estate

Tangible land and property have strikingly different dynamics when compared to stocks or bonds. According to an analysis by J.P. Morgan , direct real estate as an asset class tends to have low or even negative correlation with the S&P 500 (SNP:GSPC) — the index fund commonly used to track the overall health of the North American stock market.

To be clear, J.P. Morgan focused on direct real estate deals. An analysis by Guggenheim Investments found that real estate investment trusts (REITs) had higher correlation with the S&P 500 (SNP:GSPC) — meaning if you’re a homeowner or landlord with real property holdings, your property's value tends to rise and fall in relation to the health of the equities market. However, with real property the benefit is the inflation-hedged cash flow you earn from rent.

For investors considering a real property rental it's important to understand the financial obligations and tax ramifications of purchasing a rental property. For investors looking for real estate exposure without the headache of being a landlord, opt for shares in REITs.

Alternative asset ##: Infrastructure

Infrastructure assets such as toll roads, bridges, cell phone towers and airports have many of the same dynamics as real estate. However, these assets are more rare and could have great earnings potential.

Private infrastructure assets across the world performed better than stocks and bonds in 2022, when inflation and interest rates were rapidly rising, according to KKR. That makes these assets an ideal “shock absorber” for a typical investor’s portfolio.