5. Infrastructure: Economic e.g., Transport, Telecommunication, Energy and Renewable Energy. Social e.g., Education, Healthcare, and Government
6. Hedge Funds:
utilize short selling, leverage, and derivatives as tools to hedge against losses in core investments.
7. Exchange Funds:
Provide large single stock holdings the ability to diversify with out directly selling the holdings.
8. Real Estate: Residential, Commercial, Industrial, Agricultural, Crowdfunding, Syndications, Loans
9. Distressed Debt and Securities:
Investing in Companies or Governments that have either defaulted financially or are under financial distress.
10. Carbon Credits: is an exchange giving a monetary value to the cost of polluting the air and reflecting itself in the cost of doing business through an offset by investing in Bioremediation, Reforestation and Renewable Energy Construction.
11. Private Equity: Is the purchase and restructuring of companies not publicly listed on an exchange.
12. Venture Capital: Funds business startups, early-stage businesses, and emerging companies.
13. Financial Derivatives: Is a contract that is valued based on the underlying assets or index and provides exposure to hard-to-trade assets and markets
14. Structured Investment Products: Have the ability to customize exposure to different established markets by combining different investments thereby reducing investment volatility and increasing diversification.
15. Cryptocurrencies: is a digital online form of money built through blockchain technology.
16. Non-fungible Tokens (NFTs): NFTs represent a secure method of asset ownership, more easily transferable than traditional alternative assets as it is a unit of data stored on a digital ledger, called a blockchain, which can be sold and traded based on its licensed association to either a digital or physical asset.
17. Collectables: Wine, Whiskey, Stamps, Coins, Toys, Art, Furniture, Porcelains, Antiques, Clothing and accessories, Books, Comics, Sports Cards - to name a few.
Whilst I have listed 17 Alternative investments there are sub-categories in each which breaks them down further providing us with a sense of how broad this class of investing is.
The following are a list of characteristics that differentiate them from more traditional assets:
- Low correlation to traditional investments like stocks, bonds, currency, and cash with higher return potential compared to such investments
- More esoteric and oftentimes illiquid assets that over the longer term display less volatility compared to short term market sentiment.
- Longer lock-up of periods, that can vary between Hard lock-ups where an investors funds are tied up and inaccessible for a time and Soft lock-ups: where withdrawals are allowed, with a fee payable.
- Typically, higher minimum investment requirements including relatively high expenses regarding sales and purchases.
- Unique risk profile that requires a detailed investment analysis before buying as it may be difficult to determine the assets current market value necessitating professional advice from a registered financial planner / licensed investment advisor.
- Investment time frames for Alternative investment tend to be longer than traditional assets and tending towards investment time frames of 7, 10 and even 15 years periods.
- Alternative investments are less regulated and prone to scams and frauds.
- Alternative investments offer a level of diversification that can be viewed to provide an effective technique to minimize investment risk and volatility. Since alternative investments usually have low or zero correlation with traditional assets; it makes them a good option for portfolio diversification.
It should be noted that this article and all articles published by Creative Coach Online are for information purposes only and should not be taken as advice. It is essential to discuss the appropriateness of any Strategy with a licensed / registered professional. For more details, please visit
https://www.creativecoachonline.com/disclaimer
