What is Alternative Funds?
An alternative fund is a financial bridge gap asset between Mutual Funds, ETFs and hedge funds. It is a liquid alternative that is not categorized as conventional investments (eg. Stocks and Bonds). Alternative funds investments include venture capital, managed futures, arts & antiques, commodities, derivatives contracts and private equity. Real estate is often classified as alternative investments.
Facts:
- Offers a variety of investment vehicles and some tax benefits
- Provides opportunities that is not offered in the traditional market
- Invests in a non-traditional securities, including cryptocurrency
- For Sophisticated Investors
Diversity
Reduce volatility and risks in the portfolio.
Direct Ownership
No paper asset but direct ownership of the product such as property and antiques.
Inflation Hedge
Offsets the anticipated decrease in a currency's price.
Alternative investments often have high minimum investments. Due to lower levels of turnover, transaction costs are lower compared to conventional assets. Alternative investments capitalize on opportunities that are not offered in public markets. An alternative investment gives you diversity, an inflation hedge and direct ownership.
Source: Investopedia, Fidelity, CI Global Asset Management
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