What Are Alternative Mutual Funds and Why You Should Invest in Them


Investing in mutual funds can be a great way to build your portfolio, but they sometimes offer better returns. With more and more investors searching for alternative options to traditional stock and bond funds, there has been an increase in the emergence of what are known as alternative mutual funds. These specialty investments combine different asset classes with hedging strategies that can provide higher potential rewards — if you know how to make the most out of them. Yet, despite such promising potentials, many individuals aren’t aware of these portfolios or understand how investing with their works. In this post, we’ll delve into what alternative mutual funds are and explain why you should consider adding them to your investment plans.

Discover the benefits of alternative mutual funds

Alternative mutual funds may be right whether you’re looking for higher returns or more diverse investments. Learn about how these funds operate, such as the fees they charge, the types of investments they hold, their performance history, and any restrictions that come with them. Analyze the current market conditions to ensure you are making a smart decision and maximize your chances of success. Be sure to keep an eye on taxes, fees, risk, and liquidity when selecting funds.

selecting funds

Alternative mutual funds may be a great solution for investors seeking higher returns and greater diversification. However, it is important to understand the associated risks before investing. Take the time to do your research and work with professionals who can guide you through the process – this will help ensure that your investments are safe and secure. Nevertheless, with some careful planning, alternative mutual funds can provide an exciting investment opportunity with potentially high rewards.​

Types of alternative investments you should know about

  • Private Equity: Private equity investments involve investing in private companies or funds rather than publicly traded stocks or bonds. These investments can be made through venture capital firms, private equity firms, angel investors, or family offices. Private equity raises capital by selling ownership stakes in the company to investors and typically involves a high degree of risk but also has the potential for attractive returns.
  • Hedge Funds: Hedge funds are an alternative investment that uses sophisticated strategies such as leveraging debt, derivatives, and short sales to produce returns for their investors. Hedge fund managers make active decisions about what securities and other instruments their funds should buy and sell to generate higher returns than traditionally available in publicly traded markets. These investments are often illiquid and come with high fees, making them more suitable for sophisticated investors.
  • Real Estate: Investing in real estate is an attractive alternative investment option that can provide a steady income stream and potential for capital appreciation. Investors can invest in residential or commercial properties directly to generate rental income or through real estate investment trusts (REITs) which pool capital from multiple investors to purchase larger properties such as apartments or shopping malls.

alternative options to traditional stock

  • Commodities: Commodity investments involve investing in goods like gold, silver, oil, corn, and other natural resources used to produce everyday goods and services. These investments typically have a low correlation with stocks and bonds and are traded on commodity exchanges worldwide. Investors can access these markets through specialized funds such as exchange-traded funds (ETFs) or mutual funds.
  • Cryptocurrencies: Cryptocurrencies are a digital form of money that can be used to purchase goods and services, store value, and efficiently transfer funds around the world. Bitcoin is the most popular cryptocurrency, but hundreds of others are on the market today. Investing in cryptocurrencies is highly speculative and requires thorough due diligence before investing due to extreme volatility.
  • Art & Collectibles: Art and collectibles investments involve purchasing items like fine art, antiques, coins, stamps, jewelry, cars and other valuable collectable items for investment purposes. These investments can appreciate if properly cared for over time and may be eligible for tax breaks depending on their classification, making them an attractive alternative investment option.
  • Venture Capital: Venture capital investments involve investing in start-up companies with the potential to generate high returns if they succeed. These investments require a thorough understanding of the market and may be more suitable for sophisticated investors due to their higher risk profile.
  • 08/02/2022