Alternative investments are assets outside the conventional categories of stocks, bonds, or cash, typically favored by high net worth or institutional investors. Common examples include hedge funds, real estate, and private equity, which are often illiquid and provide portfolio diversification due to low correlation with standard financial markets. While beneficial, these investments usually comprise no more than 10% of a portfolio's overall value.

1. ALTERNATIVE
INVESTMENTS EXPLAINED

2. 2 I Lenn Mayhew Lewis
Alternative
Investments
Explained
An alternative investment is an investment
in any type of asset that falls outside the
conventional classes of stocks, bonds or cash.
Many alternative investments have limited
regulations and complex natures, so they can
be unsuitable for novice investors. High net
worth or institutional investors are most likely
to hold interests in alternative investments.

3. Lenn Mayhew Lewis I 3
Examples of
Alternative
Investment
Hedging and
Diversification
Some of the most commonly traded alternative
investments include hedge funds, real estate, pri-
vate equity, commodities, managed futures and
derivatives contracts. Many alternative invest-
ments are illiquid, especially when compared to
stocksandbonds,meaninginvestorsmayfinditdif-
ficult to sell the underlying assets in the short term.
Alternative investments are usually highly suit-
able for portfolio diversification and hedging, as
they typically have low correlation to standard
financial markets. For this reason, many of the
larger institutional funds such as private endow-
ments and pensions will often allocate a propor-
tion of their portfolio to alternative investments.
However, this proportion is usually no more
than 10% of the overall value of the portfolio.

4. If you have an interest in alternative
investment opportunities, you can read
more about this topic by visiting the blog
of Lenn Mayhew Lewis.