Moondog
Term

Alternative investments

Also: alternatives

Assets beyond listed equities and bonds, such as private markets, real assets and hedge funds.

Alternative investments can improve diversification and offer a premium for complexity or illiquidity. They ask for longer horizons, careful selection and honest liquidity planning.

Alternatives can diversify and add return, but they also add cost, complexity and illiquidity, and the gap between the best and worst funds is enormous. Success depends less on deciding to invest and more on access, selection and pacing, the unglamorous work that separates a premium from a disappointment.

Related terms

Leverage The use of borrowed money to increase investment exposure. Liquidity How quickly an asset can be turned into cash without materially moving its price. Maximum Drawdown The largest peak-to-trough fall in a portfolio's value over a period. Modern portfolio theory The framework for building portfolios by balancing risk and return through diversification. Monte Carlo simulation A technique that models thousands of possible outcomes to estimate a range of results. Private credit Lending to companies outside the public bond markets.

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