Alternative InvestmentsAlternative Investments are investments that are 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 and relative lack of liquidity. They are also subject to lesser regulation. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.
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Many Alternative Investments have high minimum investments and fee structures compared to mainstream products - stocks, bonds, mutual funds and ETFs. 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 allocated significant portion of their portfolios to alternative investments such as hedge funds. On the same time this "big boy's playground" has been restricted to small investors. Regulation has been put in place that leaves these investment opportunities available only to institutional investors. With the help of media and the "experts", a perception has been created that Alternative Investments are "too risky" and "too complex" for small investor's little brains. It is in the interest of the financial industry to keep the masses in the paper products created from the thin air and monopolize Alternative Investments opportunities only to the financial elite.
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