'We have found that a consistent allocation to alternative investments over time can benefit investment portfolios, and generally recommend to sophisticated investors an allocation of between 15 to 30 per cent of their overall investment portfolio in alternative investments,' he says.

Rudi Prenzlin, formerly with HSBC's private banking division, says all but six hedge funds globally lost money last year.

'Some equity indices have outperformed others, but on balance last year was horridly poor for asset managers,' he says. Nevertheless, there is 'still big money to be made in commodities', he adds.

When it comes to alternative real estate investments, Prenzlin believes local investors should consider 'distressed properties in Europe - especially Spain and the United Kingdom - as well as the United States'.

He is bullish on Asia because 'more alternative asset managers are piling into this region because hedge funds and asset management companies are experiencing their highest returns in Asia. They want to establish themselves in Hong Kong and diversify their assets'.

Pacini, however, stresses that alternative investments may not be suitable for individual investors.

'Alternative investments are somehow illiquid, present significant risks and are offered only [through] memoranda, which investors should review carefully prior to making investment decisions.'

Since the autumn of 2008, Pacini's clients have focused on dislocated market opportunities caused by last year's financial crisis.

'Of most interest were the dislocations in the credit markets, where we could invest in senior parts of the capital structure and earn attractive yields while waiting for those markets to rebound.'

He saw opportunities in convertible bonds, bank loans, and senior tranches of undervalued commercial and residential mortgage-backed securities.

'While many of the dislocated opportunities we saw earlier this year have played out, we are still focused on opportunistic solutions that take advantage of distressed sellers. For example, we see opportunities at this time in purchasing non-performing loans from European banks as well as looking at distressed real estate opportunities in the United States and Europe,' Pacini says.

However, those seeking alternative investments that are non-financial instruments may need to get more creative. For example, in status-conscious Hong Kong, golf club memberships are always a prized commodity.

Although local and mainland golf clubs were reticent to comment, Pan Asian Mortgage managing director Leland Sun - who gained membership of the Hong Kong Golf Club (HKGC) through his wife's employer 15 years ago - says that golf club memberships vacillate in 'direct correlation' to economic circumstances.

'Golf club memberships have varied from as low as HK$5 million up to HK$14 million in the past 10 years. In 1995, the market was frothing and HKGC memberships probably traded at HK$10-12 million,' Sun says.

Club memberships at Mission Hills in Shenzhen, with 12 golf courses, cost from HK$300,000 to HK$700,000.

It is much the same in Macau. 'Before, memberships at the Macau Golf Club were about HK$100,000, but now it's closer to a few hundred thousand dollars.'

One might wait for as long as 20 years to join a club, and Sun does not think golf memberships in Hong Kong are a good investment, because they 'do not trade frequently' and may not be transferable.

'There's not a lot of transferability because most of the time the debentures are owned by companies and if they bring a senior executive to Hong Kong then they get the benefit of membership at the HKGC or Discovery Bay Golf Club.'

Sun believes it is hard to make money trading golf club memberships, though Mission Hills memberships are transferable so one could theoretically turn a profit.

'Most golf clubs have a 20 to 30 per cent [of the cost] transfer fee to discourage trading, so you would have to mark up your selling price by up to a third just to break even,' he says.

Most of the interest in Hong Kong memberships is still local, but there is growing mainland interest.

Those seeking investments further afield could contemplate investing with The Hideaways Club.

The brainchild of British chartered accountant and entrepreneur Mike Balfour, it is an international property investment fund that gives members equity ownership in the company's whole portfolio. Investors can share a villa with four other investors and profit from the rise in the property's value.

Although many may confuse it for a timeshare, nothing could be further from the truth, says Balfour, who touts the 'exclusive use of all the properties owned by the club throughout the year' that investors enjoy. 'People can either join individually or join up with friends to share one membership,' he says.

With 25 properties throughout Europe, Africa, Mauritius, Malaysian Borneo and Southeast Asia - plus recent alliances with Banyan Tree Private Collection and Equity Estates in the United States - members have a selection of 45 properties from which to choose, making Hideaways Europe's largest club of its kind, according to Balfour.

He cites recent regional research that 'strongly suggests' keen interest in this type of operation.

'In November last year, we launched The Hideaways Club in Hong Kong on a strictly limited founder members' programme, which has proved very successful and was extremely well received,' Balfour says.

'Two of the main attractions that were commented on at the launch are the very comprehensive concierge programme that covers all the properties and dispels any language difficulties, and the fact that our properties are large, family friendly and cover a number of very attractive long-haul destinations.'

The club is benefiting from the global financial situation as people become more astute about property investment, and membership offers an investment and lifestyle uniquely combined without the hassles and expense associated with sole ownership, he says.

As for capital appreciation, during the recent global financial downturn, Balfour says, the club was in a strong financial position 'to capitalise on the drop in property values and purchase properties at extremely competitive rates, which will ultimately be to the benefit of our members as they have equity share in the whole property portfolio'.

However, overall value appreciation will ultimately depend on market values.

Balfour says the club offers a strong medium- to long-term investment backed up by a highly professional and experienced management team, which provides members with a safe and solid alternative to sole ownership.

'Their investment is safeguarded by robust corporate governance to protect members' 100 per cent ownership of property assets,' Balfour says.

With its wide variety of holiday options memberships, the club, he says, is one of the most financially astute and enjoyable ways of investing in property.

The financial success of the company can be measured against the fact that, since it started trading in 2007 with 10 properties, it has grown substantially in terms of both properties owned - 27 to date - and club memberships - currently 126.

The club seeks to provide members with new and exciting locations, as seen recently with its purchase of properties in Phuket and Bali.

'We are also looking at buying in Cambodia, Vietnam and Borneo, amongst other places, in the coming year. We always listen to members' requests, where they would like to see us investing, and for us the world is an open book.' The club is also looking for sites in Myanmar and Australia in the coming year.

'We are very excited by the growth and expansion of the company over the past two years, and if the increase in membership during 2009 is a yardstick for the popularity of the club, we are looking to continue to grow throughout 2010.'

For those seeking more environmentally friendly investments, managed forestry specialist Touchwood Investments might be worth considering.

According to MoneyWeek, 10 per cent of the world's forests have been cut down in the past quarter of a century.

Listed on the Colombo Stock Exchange in Sri Lanka, and with its holding company based in Hong Kong, Touchwood offers investors a stake in a socially responsible enterprise. The company plants trees that are harvested for forestry products and timber, sparing old growth forests.

Touchwood investors have ownership rights of the trees they buy.

'The key thing is, we're not taking over existing tree areas and we employ indigenous people,' says Jimmy Millar, a Hong Kong-based Touchwood broker manager.

Touchwood helps in saving rainforests from destruction, as well as preserving biodiversity and habitats. Managed forestry has the benefit of long-term sustainability - both financially and ecologically.

For the past century, forestry investments have yielded about 3 per cent above the rate of inflation. Entry costs are high, however.

Touchwood helps individual investors by facilitating their entry and making them stakeholders in its managed forestry enterprise.

Greater tumult in capital markets and unstable, fluctuating asset values, coupled with concerns over deforestation, climate change and biodiversity, all portend that managed forestry will burgeon.

The United Nations' Food and Agriculture Organisation estimates that global timber consumption will grow by 60 per cent in the coming 25 years. With demand for forestry products soaring, profits from managed forestry are also likely to be sustainable.

Touchwood's investors have profited over the past decade from the first vanilla trees it harvested in Sri Lanka, with the first harvest of agarwood due this autumn.

In 1999, Touchwood's chairman and founder Roscoe Maloney observed that commercially valuable trees used for furniture could also be planted as an investment.

The group received government approval to plant more than 800 hectares of mahogany trees over 20 years in Sri Lanka. What was started with an investment of US$20,000 has now grown into a company with a net worth of more than US$50 million.

Touchwood has 30 plantations growing eight species in Sri Lanka, Australia and Thailand, totalling more than 835 hectares. The company grows teak, sandalwood and vanilla in the first two. It employs 600 people in 10 countries, with 15,000 customers globally. Touchwood also has a presence in Malaysia, Qatar, Dubai, Britain and South Africa.

The company founded Agarwood Technologies in Thailand in 2008 to inoculate agarwood trees before extracting their oil and wood.

Agarwood is valuable for its resin, which for centuries has been a central ingredient in agar oil, used in Taiwanese and Japanese incense and religious ceremonies, as well as Arabian Oud. Agar oil is also a registered Chinese herb.

Agar oil goes for up to US$30,000 per kilogram on the open market and Yves Saint Laurent uses it in its costlier fragrances.

The Oud market is purportedly a multibillion-dollar industry - especially in the Middle East. 'Once the French perfumeries catch a whiff of this, they'll want it,' Millar says.

Touchwood's agarwood trees are replanted every seven years for resin extraction. 'It's a cycle ... and we have a buffer stock if things go awry during the process.'

Agarwood returns can range anywhere from 14 per cent to 23 per cent, depending on market prices at harvest time. A thousand trees cost about HK$1 million, but for those of more humble means, 50 trees would fetch about HK$65,000. After seven years, investors earn a lump-sum return on agarwood.

Another important milestone is the development of Touchwood's bamboo products for annual profits. Bamboo gives out more oxygen than any other plant, absorbs more carbon dioxide and has a higher tensile strength than steel.

According to the United Nations' Food and Agriculture Organisation, the world market for bamboo was valued at US$10 billion in 2005, and that is expected to double to US$20 billion by 2015. As a result of more industries using bamboo in production, more of the plant is being grown globally and prices are rising steadily.

According to Millar, bamboo flooring can last for 50 years.

'Based on our research, it's easier to talk about what bamboo can't do than what it can do. It's not a fad - it will be used for the foreseeable future [in Asia], and investors can see an income from it after four years.'

Touchwood also grows jatropha, which as a biofuel plant was cited by Goldman Sachs as one of the best in its category for future production. 'They grow it in Africa and South America ... its inedible and does not take food out of the supply chain the way corn ethanol does,' Millar says.

He cites attempts by India to set aside about 335,000 hectares to grow jatropha. According to Millar, under the right circumstances jatropha produces generous quantities of diesel fuel that 'does not need refining; you can put it in your tank'.

Jatropha can also be used in making paper, soap, cosmetics, embalming fluid, cough syrup, toothpaste and fertilizer.

Although there is a temptation in parts of Asia to use oil extracted from fats or crops for fuel, Millar does not believe doing so is prudent because they are part of the food chain. 'Jatropha will grow where food can't grow, so we're not stealing from that source,' Millar says, adding that investors in jatropha can typically see returns after the first two years for 20 years.

As for water conservation, jatropha has low hydration needs with good production requiring a mere 500-700mm of water per tree annually. At a minimum, a tree needs 200mm annually to survive, but it does not require especially fertile soil to produce a large yield of seeds with high oil content.

Regarding verification, investors know what trees they own because each tree is numbered and investors receive certificates bearing those numbers.

'We [Touchwood] own the land, which we lease to our clients, but they own the trees - which are tangible assets in their own right,' Millar says.

Investors receive income during the tree's life cycle from its by-products, as well as when their trees are harvested.