Alternative investments are financial assets that don’t fall under normal asset classes.
Such asset classes are generally held by High Net Worth Individuals and Institutional Investors because of their complex nature, high risk & illiquidity. Some of the well-known alternative investments are:
These are shares of companies that are not listed on any stock exchange, and therefore are not tradable on a public stock exchange platform. Generally, these are traded through counterparty transactions known as Over The Counter (OTC) transactions. Examples of unlisted shares include HDB Financial, Reliance Retail, Chennai Super Kings etc.
Hedge funds are unregistered private funds of funds that invest and trade in the market through different trading strategies.
Another type of alternative investment class is real estate, but investing in it requires huge capital. REITs & InvITs can be a golden opportunity for investors to invest in real estate and make it affordable. It’s an investment vehicle that allows all types of investors to invest in real estate even with small amounts. REITs ensure factors like security of cash flows, leverage protection and easy exit, which makes them attractive for real estate investors escaping the troubles of illiquidity.