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FIN 402 Class Notes UOP

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What are different types of alternative investment vehicles? Which is preferable? What
factors could affect the choice of such a vehicle?
Alternative investment vehicles are unlike traditional brokerage securities such as stocks,
bonds or mutual funds, and are usually not traded on an exchange. Some of the different
types of investment vehicles are real estate, hedge funds, hedging strategies, futures funds,
private equity funds, private variable life or variable annuities, and corporate stock services.
Historically speaking, I think real estate has been the most preferred alternative investment.
Precious metals are also considered to be among the most popular followed by long-short
funds. Managed-futures mutual funds and market-neutral funds have become increasingly
popular alternative investments within the past few years. Those strategies typically involve
using futures contracts or other derivatives to lower the risk of a big market move damaging
the fund's performance.
People use alternative investment vehicles for the many different reasons they offer
advantages. When bought at the right time, certain alternative investment can have better
returns than traditional securities. The most common reason why someone may invest in
alternative vehicles is for diversification to help manage risk. They don’t usually follow the
market so it reduces the exposure to market fluctuations and volatility. Some investors also
use alternative investments for tax planning purposes since they reduce and defer the taxes on
appreciation until the investor is ready to use the money.

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What are different types of alternative investment vehicles? Which is preferable? What factors could affect the choice of such a vehicle? ?Alternative investment vehicles are unlike traditional brokerage securities such as stocks, bonds or mutual funds, and are usually not traded on an exchange. Som ...
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