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Guides, Resources and News • Benzinga

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Interested in boosting your portfolio with alternative investments? Benzinga offers news, resources and the latest offerings on alternative assets like real estate, private equity, art, wine and other investments that offer high potential returns and a hedge against inflation.

Benzinga’s Favorite Alternative Investment Offerings

Explore top alternative investment offerings from the most reputable platforms on the market.

Minimum Investment: 10000-49999

Potential Return: 18%

Investment Term: 5-9 years

Open to Non-Accredited Investors?: No

Minimum Investment: 0-100

Investment Term: N/A

Open to Non-Accredited Investors?: Yes

Rhone Valley Wine Collection

Minimum Investment: 0-100

Investment Term: 5-9 years

Open to Non-Accredited Investors?: Yes

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What Are Alternative Investments?

Alternative investments are investments that don’t easily fall into one of the traditional asset classes (like stocks, mutual funds and bonds). Alternative investments typically have much higher levels of both risk and reward, and they typically come with higher investment minimums. Due to their higher degree of risk and lower levels of regulation, most alternative investments are held by high-value accredited investors.

The hedge fund industry has been using alternative assets as part of its investment strategy for decades. Now, thanks to changes in securities regulations, retail investors can now access these same opportunities.

While alternative investments may have additional barriers to entry, they can be used to add another layer of portfolio diversity to your holdings. Today, we’ll explore some of the most common alternative investments and explore investment strategies. 

Types of Alternative Investments

There are multiple types of alternative investments, ranging from privately-managed hedge funds to diverse real estate investments. The specific type of investment you choose will dictate your risk level and minimum required investment.  Popular types of alternative investments include:

Alternative Investment Strategies

Alternative assets have traditionally had low correlation rates with the overall market at large. This means that in years when the market goes down, the value of alternative investments typically goes up. Alternative investments can provide a unique level of diversification to your portfolio. Certain hard assets (like gold and property) can also provide a hedge against inflation.

While alternative investments are often valued because they go against the traditional market, this can also make them a riskier bet for your portfolio. Most institutional investors have traditionally allocated a small percentage of their overall assets to alternative investments — on average, 10% or less. However, many hedge funds and pension funds are increasing their holdings in alternative assets to 25% or more.

Pros and Cons of Alternative Investments

Like any other investment, alternative investments have their own unique benefits and drawbacks. Understanding both the pros and cons that come with alternative investments is crucial. 

Pros:

  • More potential for profits: Alternative asset managers can often take risks that standard investment managers who oversee assets with strict SEC regulations cannot. If the investment turns out to be successful, it can compound returns.
  • Diversified portfolio: Alternative investments add a unique layer of diversification to your portfolio. This can help protect your investments in the case of a recession or period of his market volatility.
  • Often work counter to the larger market: The value of alternative investments tends to increase when the overall market is bearish. Alternative investments can provide a unique hedge against a market downturn.

Cons:

  • Higher risk: Many alternative investments lack the same SEC regulations as traditional investments. While this can work to your advantage, it can also mean greater loss if you make a bad investment.
  • Less liquid: If you have an emergency bill that you need to cover quickly, you typically won’t run into much trouble if you are forced to sell your mutual fund, stocks or ETFs. Liquidating an alternative investment can be a more time-consuming and intensive process, as buyers typically aren’t readily available on the private market when compared to standard investments.
  • Higher entry point. To get started with an alternative investment, you’ll typically need a large amount of capital or to already be an accredited investor. This high barrier of entry can make alternative investments significantly more difficult to access than traditional assets. 

What are alternative investments used for?

1

What are alternative investments used for?

asked

Kevin Vandenboss

1

More investors are increasing their asset allocation to alternative investments to diversify their portfolio, increase returns, generate income and hedge against stock market volatility.

answered

Benzinga

What are the safest alternative investments?

1

What are the safest alternative investments?

asked

Kevin Vandenboss

1

While the safest alternative investment portfolio is diversified across multiple alternative asset classes, the safest alternative investment has historically been tangible assets like real estate.

answered

Benzinga


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