According to Forbes.com, the category of alternative investing “spans everything from private equity to mutual funds to ETFs – from liquid types of investments to illiquid types of investments – from those that require investors be qualified (meeting certain income and net worth requirements) to those that don’t.”

Simply put, alternative investments are investments in assets other than stocks, bonds, or cash, or are defined as a complicated asset. Alternative investments are commonly perceived as illiquid; however, they can come with their own host of benefits—often including higher returns than publicly-traded funds can offer.

Examples of alternative investments include:

  • Commodities
  • ETFs and Mutual Funds
  • Hedge Funds
  • Infrastructure
  • Private Equity
  • Real Estate Investment Trusts (REITs)

Why do people invest in alternative investments?

There are many reasons why people invest in alternative investments. Most commonly, alternative investments are seen as a way to differentiate against possible downturns in the valuations of traditional investments (they may provide a buffer from volatile movement in the public markets). While alternative investments are not often used to replace an entire investment portfolio, they can be very valuable as a portfolio enhancer.

Alternative investments often require investors to meet certain “exemptions,” or criteria, in order to be eligible to invest. To this point, they also may require a larger amount of investment capital. Although alternative investments are not regulated by the same standards as publicly-traded investments, a trustworthy alternative investment fund will happily provide transparency to its investors in terms of offering documents and business operations strategy.

 

Visit Skyline Wealth’s alternative investment products page to learn more about the private equity investments we offer.

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