Alternative investment - Financial definition
Concise definition of the term alternative investment
The term alternative investments refers to non-traditional asset classes, such as hedge funds, private equity, real estate, commodities, and venture capital, offering diversification beyond stocks and bonds.
Comprehensive definition of the term alternative investment
Alternative investments encompass a broad range of non-traditional asset classes that provide diversification benefits and potential returns uncorrelated with traditional stocks and bonds. These may include hedge funds, private equity, real estate, commodities, infrastructure, collectibles, and cryptocurrencies.
Investors often turn to alternative investments to mitigate portfolio risk, enhance returns, or access unique opportunities not available in traditional markets. However, they typically involve higher levels of complexity, illiquidity, and risk, requiring thorough due diligence and specialized expertise to navigate effectively. Despite these challenges, alternative investments have become increasingly popular among institutional and high-net-worth investors seeking to build resilient portfolios and achieve their long-term financial goals.