HomeAre you in the market for an alternative investment? If you are one of the prudent investors who is seeking to allocate a portion of assets to strategies not normally employed by the investing public this article is a must read.
There are primarily two forms of alternative investment management, hedge funds and managed futures. Hedge funds are invested in a vast number of products, both exchange listed and Over-the-Counter (OTC) derivatives. Managed futures are generally only invested in exchange listed commodity futures contracts, regulated by the Commodity Futures Trading Commission (CFTC). Be careful! If the wrong investment is chosen the investor may be left with a bad experience of alternative investment products. This article will focus on the very important issues of transparency, liquidity, lock ups, returns and taxes in regards to the alternative asset class. Readers should leave with a better understanding of a few of the primary issues involving any alternative asset investment.
TRANSPARENCY
Transparency is an issue with any investment. Most investors want to know exactly what their money is doing at all times. Giving money to someone who claims to have returns of X without knowing what the manager is actually doing is generally a bad idea. Transparency is becoming more and more of an issue as the universe of investable products grows exponentially. The recent hedge fund "blow-ups" are a case in point.
