Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors.
Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Because of this, many large institutional funds such as pensions and private endowments have begun to allocate a small portion (typically less than 10%) of their portfolios to alternative investments such as hedge funds.
While the small investor may be shut out of some alternative investment opportunities, real estate and commodities such as precious metals are widely available.
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The firm will increase its stake in venture capital and energy funds - it expects the alternative investments to provide returns of 16 to 18%.
When it comes to alternative investments, prices of collector watches are rising steadily now.