“Can my money work harder for me?”

Alternative investments include all of the investments that are not “traditional”.  Typically, that means anything other than publicly traded stocks, bonds, and money market funds.  Often, real estate is included in the alternative category, but with publicly traded Real Estate Investment Trusts (REITs), there are some traditional elements of that category, as well.  The broad definition makes it impossible to list all alternative strategies, but the most important areas are real estate, private equity, venture capital, commodities, and hedged or absolute return strategies.  Wine, art and antiques, motion picture production, and any other stores of value, might also be considered as alternative investments.

The world of Alternative Investments has expanded many-fold in the last decade and the creativity of Wall Street and the banking community has shown few bounds.  The most common structure for alternative investments is the “hedge fund”.  Alternative investment managers utilize so many different strategies that it is impossible to describe them all.  Another important aspect of such funds is the amount of leverage they use.  The leverage may be significant or none at all, depending on the individual case.  Fees for alternative investments are typically higher than those of traditional investments.  The advantages and availability of the targeted opportunities, not usually duplicated in the public markets, can outweigh the costs of alternative investments.

Publicly traded vehicles can be used to tap into the types of assets that are part of the Alternative Investment universe through Exchange Traded Funds (ETFs) and Mutual Funds.  The benefit of this method is a lower fee structure than in a private fund.  We have also utilized hedge fund partnerships and limited liability companies, particularly to access direct real estate investments.  The goal of participation in alternative investments is to complement the other traditional investments in a client’s overall portfolio to achieve client objectives.