Why Investors Are Rethinking Listed Markets – And Looking for Uncorrelated Alternatives
The Johannesburg Stock Exchange fell nearly 4% in a single trading day, driven by volatility in precious metals and broader global risk-off sentiment.
A 4% one-day decline is meaningful. While markets move daily, drops of this magnitude usually reflect heightened stress, rapid repricing of risk, or forced selling. More importantly, they expose a structural issue in many portfolios. Most listed assets are highly correlated when volatility spikes.
The Hidden Risk of Listed Market Correlation
Equities, listed property, and even bonds often appear diversified during stable periods. But in times of market stress, correlations rise and assets that were meant to diversify portfolios fall together.
This is exactly what investors experienced during the JSE sell-off broad-based declines across sectors, largely disconnected from individual company fundamentals.
What Does “Uncorrelated” Mean?
Simply put, an uncorrelated or low-correlation investment is one that:
- Does not move in line with listed markets
- Is not repriced daily by market sentiment
- Generates returns from contractual income or real-world usage
These assets don’t eliminate risk but they reduce the risk of everything falling at once.
Why Investors Are Looking to Private Markets
Private markets are gaining attention because their returns are driven by income and contracts, not daily trading flows. They are less exposed to ETF selling, algorithms, and short-term sentiment.
This makes them particularly valuable during periods of listed market volatility.
Unlisted Real Estate: Income Over Volatility
Unlisted real estate with long-term leases, fully repairing and insuring (FRI) structures, and contractual rental escalations behaves very differently from listed property stocks.
While listed property can sell off sharply in a single day, unlisted real estate continues to:
- Collect rent
- Deliver predictable cash flows
- Reprice gradually over time
For income-focused investors, this distinction is critical.
Yield-Driven Hard Assets
Beyond real estate, yield-producing hard assets — such as infrastructure, logistics assets, and asset-backed private credit — offer:
- Stable cash flows
- Lower correlation to equities and bonds
- Greater resilience during market stress
These assets rely on usage and contracts, not market confidence.
In closing, a 4% daily drop on the JSE is not just a headline, it’s a reminder.
True diversification is not about owning more listed assets, but about owning assets that behave differently. As volatility becomes more frequent, uncorrelated private market investments are increasingly moving from “alternative” to essential in resilient portfolio construction.
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