alternative investment
Also known as: alts
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Fact-checked byDoug Ashburn
Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.
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Real estate, objects of art, precious metals, and more.
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Alternative investments, also known as “alts,” are different from traditional investments in stocks, bonds, and cash. Examples of alternative investments include:
- Hedge funds: Pooled investment vehicles that use advanced trading strategies to outperform a standard benchmark, such as the S&P 500.
- Real estate: Residential and commercial properties—and funds that hold them—that aim to earn rental income and capital appreciation.
- Commodities: Physical resources that can be traded using futures contracts and exchange-traded funds (ETFs). Commodities include energy, metals, livestock, grains, and soft commodities such as coffee, sugar, cocoa, and more.
- Coins: Precious metal coins, like gold and silver, that usually trade at a premium above the corresponding “spot” prices.
- Private equity: Pooled funds whose managers invest directly in private companies.
- Cryptocurrencies: Digital currencies that rely on an encrypted digital network to execute, verify, and record transactions independent of a centralized authority, such as a government or bank.
- Non-fungible tokens (NFTs): Digital assets on a blockchain that have unique identification codes; frequently used in the realm of digital art.
- Fine art: Collectible assets including paintings, drawings, sculpture, installations, and other forms of “plastic arts.”
- Collectibles: Any assets, ranging from jewelry pieces to rare trading cards, that have the potential to appreciate in value over time.
Alternative investments carry risks, including management fees and a lack of readily available performance data. Therefore, some alts are available only to “accredited” investors, whose income and/or net worth exceeds a specific threshold.
Learn more about alternative investments.