There are risks and other considerations to consider when investing in alternatives.
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Alternative investments typically take the form of unregulated, private investment partnerships. Thus, there is less oversight and scrutiny by government regulators. |
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There is less data available for analysis, as private partnerships are not required to submit holdings, leverage, etc. |
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Investment strategies can be complex and unfamiliar. |
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Some alternative strategies have low liquidity (private equity, private real estate, LBOs, etc.). Thus, long-term time horizons are important. |
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Manager fees and operating expenses are typically higher on alternative investments as managers often charge incentive/performance-based compensation. |
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