Alternative Investment

Filed Under » , , , , , ,
Dictionary Says

Definition of 'Alternative Investment'

An investment that is not one of the three traditional asset types (stocks, bonds and cash). Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations and relative lack of liquidity. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.
Investopedia Says

Investopedia explains 'Alternative Investment'

Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors.

Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Because of this, many large institutional funds such as pensions and private endowments have begun to allocate a small portion (typically less than 10%) of their portfolios to alternative investments such as hedge funds.  

While the small investor may be shut out of some alternative investment opportunities, real estate and commodities such as precious metals are widely available.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Hedge Fund

    An aggressively ...

  2. Correlation

    In the world of ...

  3. Perfect Hedge

    A position ...

  4. Pension Fund

    A fund ...

  5. Managed Futures Account

    An account that ...

  6. SEC Form ATS

    A form that is ...

  7. Non-Security

    A type of ...

  8. Third World

    A phrase ...

  9. Agency Bond

    A bond issued by ...

  10. Convertible Arbitrage

    An investing ...

Articles Of Interest

  1. Investing In Fine Wine

    If you fail to uncork profits in this market, you can always toast your loss.

  2. Investing "Road Less Traveled" May Lead To Riches

    Using the same strategy year after year may be comfortable, but it's not always profitable.

  3. Alternative Assets For Average Investors

    These investments can add a new level of diversification to your portfolio.

  4. IRA Assets And Alternative Investments

    Interested in non-traditional investing? Make sure you follow the rules to avoid prohibited transactions.

  5. Alternative Investments In Your IRA

    If you stray off the beaten path when investing your IRA assets, you'll find new potential pitfalls and rewards.

  6. Should You Offer Alternative Investments?

    Find out what problems arise for reps when they start to diversify their client offerings.

  7. This Is Your Brain On Stocks

    Find out how the human mind can hurt investors' portfolios.

  8. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.

  9. 5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!

  10. 5 Popular Portfolio Types

    Learning how to build these portfolios will increase your investing confidence and give you financial control.
Sponsored links

comments powered by Disqus
Hot Definitions

  1. Love Money

  2. Shark Watcher

  3. Judo Business Strategy

  4. Dogs Of The Dow

  5. Chinese Hedge

  6. X-Mark Signature

Recommended
Loading, please wait...
See More »
Trading Center