Looking For An Alternative To Traditional Investments?Alternative Investing
Common Alternative Investment Strategies
There are many types of alternative investments strategies. While they span the risk/reward spectrum, historically, they’ve offered better risk-adjusted returns and often significantly outperformed traditional asset classes while experiencing lower volatility. Below are some of the most common alternative investment strategies:
Private equity investments can be defined as capital invested in companies or securities that typically are not listed on a public stock exchange. They are generally accessed through a limited partnership, with capital raised through the partnership used to develop new businesses, restructure or acquire existing businesses, or offer additional funding for existing businesses.
Investors in real assets typically invest in partnerships or private placements that are created to own tangible or physical assets. These investments typically fall into four broad categories: real estate; timber and farmland; oil, gas, and mineral partnerships; and infrastructure.
An investment in commodities represents a direct investment in raw material such as crude oil, natural gas, gold, sugar, wheat, and copper. Although certain participants in the commodity markets buy and sell the physical commodities themselves, most investors access commodities using the options, futures, or ETF markets. These markets facilitate investing in the commodities by offering exposure to the movements and characteristics of the market without the burden of trading the underlying commodities.
Hedge funds are regulated investment vehicles that are most commonly used by investment managers to pursue alternative investment strategies that are generally available through registered investment companies. Many hedge funds attempt to employ strategies that are designed to maximize returns using nontraditional strategies across nontraditional asset classes. Hedging is the practice of attempting to reduce investment risk by buying offsetting positions in order to neutralize exposure to market risk.