What Are Alternative Investments? | BlackRock (2024)

FAQs

What are examples of alternative investments? ›

Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.

Alternative investments are supplemental strategies to traditional long-only positions in stocks, bonds, and cash. Alternative investments include investments in five main categories: hedge funds, private capital, natural resources, real estate, and infrastructure.

What investments are alternative investments? Alternative investment is a catch-all term that encompasses all investments except stocks; bonds; or cash (or a mutual fund or ETF that holds one of those three). Examples include derivatives, hedge funds, commodities, and private equity, but there are many more.

Alternative investments typically don't correlate to the stock market, which means they can be used to add diversification to a portfolio and help mitigate volatility. Some can also offer tax benefits not available in traditional investments.

Alternative investment strategies differ from traditional type of investments such as stocks, bonds, and cash. They may include investments such as real estate, commercial mortgages and private debt.

Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential. Changes in economic conditions or other circ*mstances may adversely affect your investments.

AIF means any Indian investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing in accordance with a defined investment policy. Alternative investment funds are regulated by the Securities and Exchange Board of India (SEBI).

Traditional ETFs typically track mainstream asset classes like stocks, bonds or commodities, whereas alternative ETFs offer access to nontraditional or niche investment opportunities.

Conventional mutual funds and ETFsMay use derivatives as options to hedge risk. Alternative fundsMay use derivatives for hedging and speculative purposes. Using derivatives for speculative purposes is risky, as markets don't always move in the expected direction.

How to invest in alternative investments? ›

You can easily access alternative investments through crowdfunding apps such as Fundrise and Crowdstreet. Private funds, publicly traded real estate investment trusts or REITs, and managed ETFs also open the door to alternative investing opportunities.

their returns are much greater for the same reason. AIF gives the investor an avenue to pool in funds with the flexibility to invest in derivatives, listed & unlisted equity shares, debt instruments, real estate, hedge fund, etc. Thus, it is riskier than PMS and its returns are greater than that of PMS and MF.

Alternative investments offer investors the potential for diversification, higher returns, and protection against inflation. However, they come with their own set of risks and challenges, including illiquidity, higher volatility, and complexity.

For direct lending, alternatives are at 11.6%, U.S. high yield fixed income is at 8.4%, commercial real estate mezz alternatives are at 8.1%, commercial mortgage loans-senior alternatives are at 4.4%, and U.S. 10-year treasury yield fixed income is at 4.4%.

Gold is traditionally considered an alternative asset to investments like stocks and bonds, and it can provide diversification.

The Merrill difference

We offer third party alternative investments based on their merits, rather than prioritizing proprietary ones. Our scale and commitment facilitates access – sometimes exclusive – to a broad array of asset managers, including some with lower minimums.