Alternative Asset

An alternative asset is a financial asset that does not fall into the conventional categories of stocks, bonds, or cash.

Example

A pension fund might invest in private equity and real estate as alternative assets to diversify its portfolio beyond traditional stocks and bonds.

Key points

• Financial assets outside of traditional categories like stocks, bonds, or cash.

• Includes real estate, private equity, hedge funds, and commodities.

• Offers diversification benefits and potential for higher returns.

Quick Answers to Curious Questions

What are alternative assets?

Alternative assets are investments outside the traditional categories of stocks, bonds, and cash, including real estate, private equity, hedge funds, and more.

Why do investors include alternative assets in their portfolios?

Investors include alternative assets to diversify their portfolios, reduce risk, and potentially achieve higher returns.

What are the risks associated with alternative assets?

They are often less liquid, more complex, and may carry higher risks and fees compared to traditional investments.