A Definition of Alternative Investments

B E N C H M A R K I N T E R N AT I O N A L

A DEFINITION OF ALTERNATIVE INVESTMENTS

A DEF I NI T ION OF A LT ERNAT IV E I N V E S TM ENT S Alternative investments are investments that fall outside of the conventional categories, such as cash, bonds and stocks.

Most alternative investments are more complex, carry a higher degree of risk, and have less regulation than traditional investments. For these reasons, most investors in alternatives are either high-networth individuals or institutional investors.

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EXAMPLES

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Common examples of alternative investments include venture capital, private equity, commodities, real property, hedge funds, and a variety of tangible assets such as gold, art, wine and classic cars.

ACCESS Access to alternative investment can be made feasible to retail investors via funds

and other managed services, such as mutual funds, exchange traded funds, and alt funds.

These allow those with less capital to pool resources and access investments that would otherwise be financially prohibitive.

Alternative investments typically have higher fee structures and minimum investments than traditional investment vehicles. However, the low level of turnover can often result in reduced transaction costs, so the right investor may find them financially viable.

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INVESTMENT COSTS

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One of the largest sectors of alternative investment is private equity. You can learn more about private equity funds by visiting the blog of Benchmark International.