World Library  
Flag as Inappropriate
Email this Article

Alternative investments

Article Id: WHEBN0010166282
Reproduction Date:

Title: Alternative investments  
Author: World Heritage Encyclopedia
Language: English
Subject: Investment, Tangible investment, Distressed securities, Gold as an investment
Collection:
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Alternative investments

An alternative investment is an investment in asset classes other than stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals,[1] art, wine, antiques, coins, or stamps[2] and some financial assets such as commodities, private equity, distressed securities, hedge funds, carbon credits,[3] venture capital, film production[4] and financial derivatives. Investments in real estate and forestry[5] are also often termed alternative despite the ancient use of such real assets to enhance and preserve wealth.

Research

There is a wide variety of literature on alternative investments; however, this term has been used broadly and can also be used to refer to financial alternatives such as derivatives or other alternatives such as energy. It is difficult to find research on the investment characteristics of tangible alternatives such as art or wine due primarily to a lack of good quality data. The Goizueta Business School at Emory University has established the Emory Center for Alternative Investments to provide research and a forum for discussion regarding private equity, hedge fund, and venture capital investments.

Investors

The Merrill Lynch/Cap Gemini Ernst & Young World Wealth Report 2003, based on 2002 data, showed high net worth individuals, as defined in the report, to have 10% of their financial assets in alternative investments. For the purposes of the report, alternative investments included "structured products, luxury valuables and collectibles, hedge funds, managed futures, and precious metals".[6] By 2007, this had reduced to 9%.[7] No recommendations were made in either report about the amount of money investors should place in alternative investments.

Characteristics

Alternative investments are sometimes used as a tool to reduce overall investment risk through diversification.

Some of the 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 the asset
  • Alternative investments may be relatively illiquid
  • Costs of purchase and sale may be relatively high
  • There may be limited historical risk and return data
  • A high degree of investment analysis may be required before buying

See also

Further reading

References

External links

  • by Chris Veld, University of Stirling. (Incomplete first draft)
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from World eBook Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.