Video Alternative investment
Research
Because the definition of alternative investments is broad, data and research vary widely across investment classes; for example, art and wine investment may lack high-quality data. The Goizueta Business School at Emory University has established the Emory Center for Alternative Investments to provide research and forums for discussions on private equity, hedge funds, and venture capital investment.
Maps Alternative investment
Access to alternative investment
In recent years, alternative financial growth has opened up new avenues for investing in alternatives. These include the following:
Crowdfunding Equity
The equity crowdfunding platform enables the "crowd" to review the initial investment opportunities presented by the entrepreneur and take equity stake in the business. Usually the online platform acts as a broker between investor and founder. These platforms are very different in the types of opportunities they will offer to investors, how much due diligence is done, the level of investor protection available, the minimum investment size and so on. The equity crowdfunding platform has seen a tremendous amount of success in the UK and, with the passage of the Title III JOBS Act in early 2016, it is now taking steam in the United States.
Crowdfunding led by investor
The investor-led model was introduced by the UK-based Crowfunding platform, SyndicateRoom, and made it necessary for start-ups looking for funding to be first reviewed by experienced investors who also invested a significant amount (25% or more) of the target.
SEIS and EIS funds
Available only in the UK, SEIS funds and EIS funds present an efficient way of tax investment in early-stage efforts. It works like a venture capital fund, with the added bonus of receiving government tax incentives for investments and loss protection in case the company is invested unsuccessfully. These funds help diversify the investors' exposure by investing in some initial ventures. Fees are usually charged by the management team to participate in the fund, and this can end anywhere between 15% and 40% of the value of the funds during his lifetime.
Personal equity
Private equity consists of large-scale private investment into companies that are not listed in return for equity. Private funds are usually formed by combining funds from institutional investors such as high-value individuals, insurance companies, and pension funds. Funds are used in conjunction with borrowed money and money from private equity firms themselves to invest in businesses that they believe have high growth potential. In Europe, venture capital, purchases and purchases are considered private equity.
Infrastructure as asset class
The idea of ​​"infrastructure as an asset class" has grown steadily in the past seven years. However, so far, this development has preserved institutional investors: pension funds, insurance companies and state property funds, with very limited access to high-value investors (except for some large family offices).
Art
In a 1986 paper, William Baumol used the resale method and compared the price of 500 paintings that sold over 410 years before concluding that the average annual real return of arts was 0.55%. Another study of high quality oil paintings sold in Sweden between 1985 and 2016 determines average returns to 0.6% per year. However, art gallerists are sometimes ambivalent with the idea of ​​treating artwork as an investment. Art is also very difficult to judge, and there are several factors to keep in mind for art assessment.
Investor
The "Merrill Lynch/Cap Gemini Ernst & 2003 Young Wealth Reports", based on 2002 data, show high net worth individuals, as defined in the report, to own 10% of their financial assets in alternative investments. For reporting purposes, alternative investments include "structured products, luxury goods and collectibles, hedge funds, managed futures, and precious metals". In 2007, this has been reduced to 9%. No recommendation is made in the report either about the amount of money that should be should be placed in an alternative investment.
Characteristics
Alternative investments are sometimes used as a way to reduce overall investment risk through diversification.
Some characteristics of alternative investments may include:
- Low correlation with traditional financial investments such as stocks and bonds
- It may be difficult to determine the current market value of an asset
- Alternative investments may be relatively illiquid (see "alts liquid")
- The cost of purchase and sale may be relatively high
- There may be historical risk and limited return data
- High-level investment analysis may be required before purchasing
Alternative liquid
Alternative liquid ("alts") is an alternative investment that provides daily liquidity. Alternative liquid investments should result in returns that are not correlated with GDP growth, should have protection against systemic market risks and should be too small to create new systemic risk to the market. Hedge funds can be included in this category; however, traditional hedge funds may have liquidity restrictions, and the term is commonly used for registered mutual funds that use hedge fund strategies such as short-term equity investments.
United States
The liquid alternative became popular in the late 2000s, growing from $ 124 billion in assets under management 2010 to $ 310 billion in 2014. However, by 2015 only $ 85 million is added, with 31 closed funds and low-profile performance- high by the largest long-short equity fund at the time, Marketfield Fund.
By 2014 it is estimated that there are 298 liquid alternative funds with strategies such as short-term equity funds; event driven, relative value, tactical trade (including managed futures), and multi-strategy. This amount excludes option income funds, short tactical and indexed index funds.
Has been expressed skepticism over the complexity of liquid alts and the lack of capable portfolio managers. One of the world's largest hedge fund managers, AQR Capital, began offering funds in 2009, and grew from $ 33 billion in assets managed (AUM) in 2010 to $ 185 billion in AUM in 2017 driven in part by mutual fund marketing such as products at a lower cost. By 2016, AQR Capital is the largest liquid alts management.
See also
- Chartered Alternative Investment Analyst
- Philatelic investment
- Traditional investment
- Platinum as an investment
- Gold as an investment
- Palladium as an investment
- Silver as an investment
- Lithium as an investment
- Wine investment
- Diamonds as an investment
- Art assessment
References
Further reading
- H. Kent Baker and Greg Filbeck (2013). Alternative Investment: Instruments, Performance, Benchmarking and Strategy . John Wiley & amp; Children. ISBN: 978-1-118-24112-7.
- David M. Weiss (2009). Financial Instruments: Equity, Debt, Derivatives, and Alternative Investments . Portfolio. ISBNÃ, 1-59184-227-1.
- How To Invest In Coins And Coins . Quick Quick Guide. 2008. ISBN: 1-60620-661-3.
External links
- The Benefits of Portfolio Investment Diversification in Stamps by Chris Veld, University of Stirling. (First incomplete draft)
- What is an alternative investment?
Source of the article : Wikipedia
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