Alternative Investments

Alternative investments are financial assets that do not fall neatly into conventional investment categories, like stocks, bonds, or cash. The most common alternative investments include pre-IPOs, real estate, private equity/venture capital, hedge funds, loans, and contracts like futures.

Alternative investments are assets in a variety of forms that are not categorized as a typical or conventional investment type such as stocks, bonds, and cash. Alternative investments are inclusive of real estate investments, hedge funds, private equity or venture capital, managed futures, art and antiques, commodities, and more. In the graphic below, we’ve outlined the key differentiation between traditional investments vs. alternative investments.

Alternative Investments may be attractive investments to qualified retail investors because they are generally uncorrelated (meaning they do not follow the stock market). Because they don’t follow the stock market, alternative investments have the potential to provide non-correlated returns.

When considering alternative investments and pre-IPO opportunities, investors often seek opportunities beyond traditional asset classes like stocks and bonds.

Alternative investments (such as real estate, commodities, private equity, hedge funds) and pre-IPOs can provide a way to diversify a portfolio, reducing reliance on traditional stock and bond portfolios. Diversification helps spread risk across different asset classes that may not move in correlation with the public equity markets.

Investing in private companies before they go public may offer early-stage exposure to their growth as they expand operations and work toward profitability.

Pre-IPO shares are typically reserved for institutional investors or Qualified Investors. Accessing these investments requires meeting eligibility criteria, and investors should be aware of the risks, including limited liquidity, potential valuation changes, and company performance uncertainty.