Should You Invest in Alternative Alternatives?

With interest rates at zero and the introduction of crowdfunding-based financial innovations, investors are seeking both alpha and diversification in alternative assets: start-ups, consumer loans, private equity, and real estate projects.

While investors have deployed capital into venture capital and private equity funds, credit funds, and REITs for quite some time, “alternative alternatives” or “A2”, represent the possibility of investing in specific securities within each of these alternative asset classes. Just like the public invests in and lends to public companies through individual stocks and bonds — not just mutual funds, the investing public can now invest in and lend to private companies and individuals through crowdfunding.

Alternatives Went Mainstream, A2 to Follow

Once considered an investment vehicle only for sophisticated, high-net-worth individual investors, alternatives — real estate, private equity funds, hedge funds, managed futures, commodities, and venture capital — have become a standard component of almost every professionally-managed investment portfolio, growing twice as fast as non-alternatives since 2005.

 

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