What is an Alternative Investment?
Alternative investments, also known as “alternatives” or “alts” are generally considered to be any investments made in asset classes other than stocks, bonds, and cash. There is a robust list of alternative investments to choose from, ranging anywhere from tangible assets like art and precious metals to financial assets like venture capital and real estate investments.
Alternative investments aren’t traded on public markets like stock exchanges or OTC , instead, they’ve traditionally been invested through more exclusive channels like Portfolio Management Services and Alternative Investment Funds.
Because alternatives tend to have lower correlations to traditional investments, they are primarily used to diversify an investment portfolio and provide return profiles that may differ from those of traditional investments.
For large institutional investors with a tolerance for illiquidity , alternative investments could include a combination of hedge funds, private equity, alternative credit, and real estate. For individual investors, the alternative investment universe may include all of these and even vintage cars, rare wines, or fine art.