Diversifying your portfolio is crucial to the long-term health of your savings. But even the most seasoned of investors can struggle to pick out alternative assets that will not drop alongside their shares when stock markets fall. 

So how can you best invest to spread risk and smooth the way during periods of market volatility? Telegraph Money has identified assets that should not always move in lock-step with the rest of the stock market and which can help differentiate your portfolio in the decades to come.

Alternative assets

Pop stars may come and go, but some make for great investments. Gordon Smith of the wealth manager Killik highlighted the Hipgnosis Songs Fund, which invests in the rights to music. The trust, which floated in 2018, has a portfolio of song rights worth more than $2.5bn (£1.9bn). It includes works from the likes of Blondie, the Rolling Stones and Neil Young. 

“The portfolio is built around proven hit songs across a range of musical genres, which produce predictable, copyright-protected income,” Mr Smith said. 

“Hipgnosis invests in the songwriter’s copyright interest in a musical composition and acts as the management company to collect all, or a portion, of the royalty revenues.” The trust’s dividend yield is currently 4.6pc. Song rights are not the only new type of asset that can be harnessed for your portfolio. 

Mr Smith also highlighted the Cordiant Digital Infrastructure trust, which invests in what he described as the “plumbing of the internet”: data centres and fibre optic cables. It has returned 8pc since its launch in February 2021. These types of trust typically have a low correlation with the stock market because they invest in essentials or assets that are in demand whatever the economic outlook. 

Their revenues remain stable during downturns, while during periods of high inflation they can pass on rising costs to their customers. This means they are less vulnerable to wider volatility. Another alternative asset is renewable energy infrastructure. Darius McDermott of the broker Chelsea Financial Services highlighted the Gravis Clean Energy Income fund, which has returned 65pc in three years and yields 3.5p

Go private

Looking beyond the stock market can be lucrative too, especially as companies choose to stay private for longer. Peter Walls, who buys listed funds for his £123m Unicorn Mastertrust, said investment trusts that specialised in private equity looked particularly compelling. 

However, prospective investors should note that these trusts often charge a higher management fee than the average, and those that specialise in technology companies have felt the effects of the sell-off in their listed counterparts. “In times of market stress, investment trust discounts typically widen and the recent volatility has hit private equity trusts hard,” Mr Walls said. “But if you are willing to take a long-term view, this could be a good time to look for bargains.” 

Mr Walls highlighted Oakley Capital Investments, which trades at a 26pc discount to the value of its assets and has delivered returns of 175pc in the past five years. Another option is Molten Ventures, formerly known as Draper Esprit, said Mr Smith. 

“The company has grown to become one of the most active venture capital firms in Europe, developing and investing in disruptive, high-growth technology,” he said. It has backed businesses such as the investment platform PrimaryBid and the banking app Revolut. 

Future-proofers

While recent market falls may have left savers worried about the health of their portfolios, weaker share prices could present a buying opportunity for investors looking to the long term. David Kimberley of the research firm Kepler Intelligence said: “The sell-off has created some great opportunities. International Biotechnology Trust is a good option. It trades at a 7pc discount and its managers have taken advantage of indiscriminate selling to buy shares they believe are now severely undervalued.”

Mr McDermott pointed to the Marlborough Global Innovation fund, which has returned 95pc in five years. “It has a concentrated portfolio of fast growing companies. It does have a heavy weight to technology firms but will invest in innovative companies from any sector,” he said. He also tipped the Sanlam Artificial Intelligence fund.