Alternative investment funds are generally funds whose performance is not directly aligned with the underlying investment market. These funds are often used to reduce a client’s portfolio risk without sacrificing long-term performance.
The portfolio approach also works for alternative investment funds, combining assets to work in synergy with each other helps produce consistent returns that are not exposed to the volatility of the investment markets.
Intrinsically alternative investments are normally more involved than traditional investments, which indicates that the skill set needed to manage them accurately is not always found within the field of traditional investments.
With this in mind, it is important to identify fund managers that have displayed expertise in the underlying asset class and have delivered higher than average returns within managed risk budgets.
There are a number of variations within this category:
Exposure to currency investment fund can be done through systematic funds/actively managed funds that use mathematical models that aim to incorporate trends, interest rate differentials, and self-correcting movements between currency pairs and sequences of currency pairs/combination of currency pairs
These are managed by numerous long/short global specialists who use various asset classes including commodities, credit, debt, emerging market, European/Asian/UK/US equities, etc
Multi-Asset absolute return investments, consist of a broad mixture of individual positions with the purpose of producing definite returns in any supplied market condition, consisting of traditional asset classes including advanced investment strategies using derivatives, property, bonds, and equities
Investments usually require investors to combine their capital for investing into privately held companies under the management of a devoted private equity fund manager; they are long-term in nature, offering little or no liquidity until maturity
These are often referred to as systematic, quantitative, managed futures or CTA’s and computer-derived strategies that trade global exchange-traded options and futures in currencies, short-term interest rates, bonds, equities indices, and commodities