SMU fourth-year business student and student trainer in the Citi-SMU Financial Literacy Programme for Young Adults, Ang Ben You, commented on alternative investments, such as wine and art. He noted that such investments, being unconventional in nature, can sometimes have low levels of liquidity. This is sometimes not well understood by investors and is the reason why a liquidity premium is required. However, one key advantage of such alternative instruments is in the diversification they provide to a portfolio. This is because of possibly better risk-adjusted returns – which mean lower volatility, together with better gains or less painful losses. Alternatives can thus diversify a traditional long-only portfolio of stocks and bonds.