What Is an Alternative Investment?
An alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash. Alternative investments include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.
KEY TAKEAWAYS
- An alternative investment is a financial asset that does not fall into one of the conventional equity/income/cash categories.
- Private equity or venture capital, hedge funds, real property, commodities, and tangible assets are all examples of alternative investments.
- Most alternative investments are unregulated by the SEC and tend to be somewhat illiquid.
- While traditionally for institutional investors and accredited investors, alternative investments have become feasible to retail investors via alt funds, ETFs and mutual funds.
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