An investors choice of investment opportunities is largely restricted in traditional markets, the familiar world of stocks, bonds, exchange-traded funds and other pre-packaged products, however there is a whole universe of alternative investment opportunities that every investor should be aware of.
Alternative investments include venture capital, private equity, hedge funds, real estate investment trusts, commodities as well as real assets such as precious metals, rare coins, wine, and art. These asset classes generally work without the same correlation to the traditional markets and its volatility and Alternative assets have out performed traditional markets in the past decades but may be difficult to value, and are generally more illiquid than traditional investments.
The alternative market a whole with only a few exceptions is only available to accredited investors. qualified investors are able to invest directly in to alternative investments, as these investments are growing in popularity as institutional investors including pension and endowment funds are increasingly allocating money to alternative investments. The alternative investment platform has been created to provide investors seamless access to current alternative investment opportunities.
SO WHAT KIND OF INVESTMENTS MIGHT YOU BE ABLE TO FIND ON THE ALTERNATIVE INVESTMENT PLATFORM?
1. Private equity. Private equity is quite broad as it relates to the entire investment spectrum of the private capital markets, Today there are more private companies than public companies across the globe, and many of them take on investor capital.
Private equity firms typically raise funds and take capital from both non-institutional and institutional investors, All accredited. The funds will then be used to place investments in promising private companies. The capital is returned to investors upon an exit event such as an IPO or acquisition after the firm takes its management and performance fee. As mentioned, private equity is a general classification that includes the investment in start-ups, venture capital, and financing throughout phases of a company's growth.
2. Start-ups and private companies. Investors can directly invest into start-ups and private companies, Investing seed capital directly in start-ups is sometimes referred to as angel investing. Angel investing is a high risk and high return strategy at the same time for investors as many start-ups end up failing. Retail investors can participate in some offerings depending on the type of self certification they fall under. .
3. Real Assets. Simply put and as it sounds, real assets are physical or tangible assets that have intrinsic value such as real estate, precious metal commodities, agriculture land oil, and other collectable goods also fall into this category, including wine, art, jewelry and rare coins. Investors can buy real assets directly or you can look for a fund that specializes in real asset investments.
4. Hedge Funds. These are investment funds pool together that invest in a variety of asset types using multiple strategies. Hedge fund managers raise funds and invest with a variety of styles and financial instruments. Some of the more common hedge fund strategies include equity long-short, distressed assets, arbitrage
5. Venture Capital. A venture capitalist would be investing into private equity, early-stage to growth-stage companies, SEIS and EIS for example. Firms will be raising funds from high net worth and institutional capital This capital source is very important for start-ups and early-stage companies that have no access to public financing as most of them lack extensive operational or revenue history. Venture capital is typically a risky asset class, but can often make significant returns such as Google, Facebook, Youtube or the 1000's of not so known companies also giving investors significant returns on investment.
6. Fund of Funds. These are large investment vehicles that have been formed funds to gain diversification by investing in multiple asset classes and spreading the risk / reward.
7. Private placement debt. Investment in debt is possibly the largest market in the alternatives space presently. Bank instruments, Promissory notes or mezzanine debt are often used to finance a private company, many humanitarian projects such as infrastructure, housing or energy are funded through these programs while giving investors fixed and steady cash flows.
If you are ready to diversify and want some investment options made available to you we highly recommend you self certify as an accredited investor and register on the alternative investment platform for free. Start discovering a number of opportunities across a number of the asset classes from above. www.InvestingUK.com
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