Alternative Investments in the UK: a Guide for High-Net-Worth Investors

Interest in alternatives has grown as investors look for assets that behave differently from the stock market. The range is wide: some alternatives are regulated funds you can hold in an ISA, while others, such as fine wine or a barrel of spirits, are physical assets with no regulator at all. This guide explains what counts as an alternative investment, who can access them in the UK, how the main types compare, and how to judge whether one belongs in your portfolio.

In this guide:

1. Alternative investments at a glance

2. What are alternative investments?

3. Who counts as a high-net-worth investor in the UK?

4. The main types of alternative investment

5. Collectibles and passion investments

6. What alternatives can (and can’t) do for a portfolio

7. The risks of alternative investments

8. How to choose an alternative investment

9. Where tequila barrels fit

Alternative investments at a glance

Sources: Burges Salmon (March 2024); Knight Frank Wealth Report via Outlook Business (23 April 2026); FSCS; Hargreaves Lansdown (September 2025). Checked 22 October 2026. Regulatory status is a general guide only: check each product.

What are alternative investments?

An alternative investment is any asset outside the three traditional classes of listed equities, bonds and cash. The term covers two very different groups:

• Financial alternatives: private equity, venture capital, private credit, hedge funds and infrastructure. These are usually accessed through funds and are often regulated.

• Real and physical alternatives: property, commodities such as gold, and collectibles such as art, wine, watches, classic cars and spirits. Physical collectibles are usually unregulated.

What they share is that prices are not set on a public exchange every second. That can make them less volatile on paper, harder to value, slower to sell and more dependent on the skill of whoever selects and manages them.

Who counts as a high-net-worth investor in the UK?

In everyday use, “high net worth” simply means someone with significant investable wealth. In UK financial regulation it has a specific meaning. Under the Financial Promotion Order, an individual can sign a statement certifying that they are high net worth if they had income of at least £100,000 in the last financial year, or net assets of at least £250,000 (excluding their main home and pension) throughout that year (Burges Salmon, March 2024). The government briefly raised these thresholds in January 2024 and reversed the change in March 2024.

Certification matters because some private investments can only be promoted to high-net-worth or sophisticated investors. It does not give you extra protection, and it does not mean an investment is suitable for you.

US readers: the nearest US equivalent is the SEC’s “accredited investor”, which for individuals means net worth above $1 million excluding your main home, or income above $200,000 ($300,000 jointly) in each of the last two years (SEC).

The main types of alternative investment

Private equity and venture capital

Private equity funds buy stakes in unlisted companies, aiming to improve and sell them over several years. Venture capital does the same for early-stage businesses. UK investors can reach them through listed investment trusts, specialist funds, and tax-advantaged schemes such as the Enterprise Investment Scheme (EIS) and venture capital trusts (VCTs), whose reliefs come with strict conditions set by HMRC (GOV.UK). Money is usually tied up for years, and early-stage companies can fail.

Private credit

Private credit means lending to companies or property projects outside the banking system, in return for interest. It can provide income, but borrowers can default and loans can be hard to exit early.

Long-term asset funds (LTAFs)

The FCA introduced the long-term asset fund in 2021 to give more investors access to private markets such as private equity, private debt, infrastructure and real estate. LTAFs typically deal monthly or quarterly and may require up to 90 days’ notice to withdraw, according to Hargreaves Lansdown (September 2025), which says they can be held in SIPPs and Innovative Finance ISAs, and in Stocks and Shares ISAs from April 2026.

Property

Property is the most familiar alternative. Direct ownership gives you control and rental income but is slow to buy and sell. Real estate investment trusts (REITs) and property funds are easier to trade but behave more like shares.

Commodities and gold

Gold is often held as a store of value in times of uncertainty, and is widely described as an inflation hedge. It pays no income, and its price can move sharply in both directions. Exchange-traded products give exposure without storing metal yourself.

Hedge funds

Hedge funds use a range of strategies, such as betting on prices falling as well as rising, to target returns that don’t simply track markets. They usually charge higher fees and are mostly open to professional and high-net-worth investors.

Collectibles and passion investments

Collectibles are physical assets bought partly for enjoyment and partly for their potential to rise in value. Knight Frank’s Luxury Investment Index (KFLII) tracks a basket of them. Over 2025 the index was broadly flat, down 0.4%, after two years of correction, but it was up 38.6% over ten years (Outlook Business, 23 April 2026, reporting Knight Frank’s Wealth Report).

Sources: Knight Frank Wealth Report 2026, via Outlook Business, 23 April 2026 (checked 22 October 2026). Fine wine is not part of the KFLII; its figure is from the WineFi trade-based price-weighted index based on all trades of 750 ml bottle cases—covering both auctions and online exchanges—for wines that have traded at least once in every quarter from Jul 2020 - Jan 2026. Data aggregated from multiple sources including WineLabs.

The spread shows why selection matters: within a single year, one category rose by double digits while another fell by a similar amount.

Art

Art offers the widest range of prices and the least transparency. Transaction costs, such as auction premiums, insurance and authentication, are high, and values depend heavily on taste and provenance.

Fine wine

Fine wine has a well-developed secondary market, with price indices published by the trading platform Liv-ex. It has been through a correction: Liv-ex reported that the total value of trade in 2025 was down 5.8% on 2024, though prices looked to be “stabilising, particularly at the top end” (The Drinks Business, 10 February 2026). Prices held up better than trading activity: our parent company WineFi’s trade-based index, which tracks auction and online exchange prices, rose 2.6% over 2025.

Whisky and other spirits

Rare whisky rose strongly through the 2010s but has fallen since 2023. Our honest look at whether whisky is a good investment covers what bottles and casks have returned, and our cask investment guide explains how buying a cask works.

Watches and classic cars

Both have deep collector communities and active auction markets. Condition, provenance and originality drive prices, and storage, servicing and insurance add to costs.

What alternatives can (and can’t) do for a portfolio

Investors usually look at alternatives for three reasons:

• Diversification. Assets whose prices are driven by different things from listed shares can smooth a portfolio’s overall returns. Some alternatives are described as “uncorrelated assets”, although correlations can rise in a crisis, and assets that are valued infrequently can look less volatile than they really are.

• Access to different returns. Private companies, specialist lending and scarce physical assets offer returns that aren’t available on the stock market.

• Protection against inflation. Real assets such as property, commodities and some collectibles are often held because their value is linked to physical goods, though none offers a guaranteed hedge.

What alternatives cannot do is remove risk. They swap the daily price swings of public markets for other risks: illiquidity, valuation uncertainty, higher costs and, for physical assets, storage and authenticity.

The risks of alternative investments

Alternatives can play a valuable role, provided you understand the trade-offs:

• Illiquidity: many can’t be sold quickly, and some have lock-up or notice periods.

• Valuation: prices may be estimates or based on infrequent sales.

• Costs: management fees, performance fees, storage, insurance and transaction costs can be significant.

• Regulation: physical assets such as art, wine and spirits are not FCA-regulated investments, and the FSCS only protects regulated products from authorised firms (FSCS).

• Provider risk: you rely on the manager, platform or custodian to select, store and record your assets properly.

• Tax: the tax treatment of each asset differs and can change, so take advice on your own position.

The FCA’s ScamSmart guide is a useful starting point for checking any firm, whatever the asset.

How to choose an alternative investment

Before committing to any alternative, ask:

1. What exactly do I own? A share in a fund, a contract, or a specific physical asset registered in my name?

2. How is it valued, and by whom? Is there an independent price source?

3. How and when can I get out? What are the exit routes, notice periods and costs?

4. What does it cost in total? Ask for every fee in writing, including storage and exit costs.

5. Who holds the asset, and what happens if the provider fails? Look for ring-fenced client assets and clear ownership records.

6. How much of my portfolio should it be? Many advisers suggest keeping illiquid alternatives to a share you could leave untouched for years.

Where tequila barrels fit

Tequila barrels are one of the newer alternatives: a physical, scarce asset whose value is linked to time in oak rather than to the stock market. Tequila can only be made in a designated region of Mexico from 100% Blue Weber agave, a plant that takes 6 to 8 years to mature, and extra añejo, the most valuable aged category, needs at least three years in oak. Compared with whisky, the investment market is at an early stage: tequila appears to be where whisky was 10 years ago, and our tequila vs whisky investment comparison sets out how the two differ.

Tequila Reserve by WineFi offers multiple tequila barrel investment programmes. Prices range between £1,000–£6,000 dependent on production methods, age and distillery. Across our programmes:

• Everything is included for three years: the purchase price covers all fees, insurance and storage for the first three years, the recommended hold for the tequila to become extra añejo.

• Ownership is documented: each barrel is held in a CRT-authorised warehouse at the distillery in Mexico, registered with its own serial number from the Consejo Regulador del Tequila (CRT), and you receive a certificate of ownership.

• You choose the exit: after three years you can keep ageing the barrel to five, seven or ten years, bottle it under your own label with our bottling partners, or sell it, either privately or through WineFi for a commission, subject to market demand.

• Tax: we have received independent UK tax advice that cask tequila should qualify as a wasting asset, so UK tax-resident collectors should generally be exempt from Capital Gains Tax on any gain. Tax treatment depends on your circumstances and can change.

Barrels, prices and exit options vary by programme. See how tequila barrel investment works for the full process, or our process for how we select and manage barrels.

The risks are real. Tequila barrels are not an FCA-regulated investment and are not covered by the FSCS. They are illiquid, values can fall as well as rise, and there is no guarantee of a buyer, or of a particular price, when you want to sell. Tequila’s secondary market is young, with fewer past sales to guide pricing than whisky or wine. Read the risks of investing in tequila barrels and take independent advice before investing.

FAQs about alternative investments in the UK

What are alternative investments?

Alternative investments are assets outside listed shares, bonds and cash. They include private equity, venture capital, private credit, hedge funds, property, commodities such as gold, and collectibles such as art, fine wine, whisky, watches and classic cars.

What are the best alternative investments in the UK?

There is no single best alternative. The right choice depends on your goals, time horizon and need for access to your money. Private markets suit long-term investors, property and gold are familiar diversifiers, and collectibles suit those who understand the market and can hold for years.

Who counts as a high-net-worth investor in the UK?

For certain financial promotions, you can self-certify as high net worth if you had income of at least £100,000 in the last financial year, or net assets of at least £250,000 throughout that year, excluding your main home and pension.

Are alternative investments regulated in the UK?

Some are. Funds such as LTAFs, investment trusts and many private equity funds are regulated. Physical assets such as art, fine wine, whisky casks and tequila barrels are not FCA-regulated investments, and the FSCS does not cover them.

Are alternative investments a good hedge against inflation?

Real assets such as property, gold and some collectibles are often held for that reason, because their value is linked to physical goods. None is a guaranteed hedge, and prices can fall even when inflation is high.

How much of a portfolio should be in alternatives?

There is no fixed rule. Many investors keep illiquid alternatives to a minority of their portfolio, sized so that they could leave that money untouched for several years. A financial adviser can help you decide what suits your circumstances.

Can US investors buy UK alternative investments?

Often, but rules differ. In the US, many private investments are limited to accredited investors, defined by the SEC as individuals with over $1 million net worth excluding their home, or income above $200,000 ($300,000 jointly). Check the rules that apply where you live.