An alternative asset is any non-traditional asset with potential economic value that would not be found in a standard investment portfolio. Due to the unconventional nature of alternative assets, valuation of some of these assets can be difficult.
For most people, examples of alternative assets would include:-
- Art and Antiques
- Precious Metals
- Fine Wines
- Rare Stamps
- Coins
- Sports Cards
- Other Collectibles
Venture Capital Funds are those AIFs which are positive and beneficial to the Indian economy and enhances growth. Hence, these funds receive incentives or concessions by SEBI or the Government of India. Such funds generally include investments in start-ups or early stage ventures, social ventures, SME’s, infrastructure or other sectors which are considered socially or economically important for the country.These investments are generally characterized as high-risk/high-return opportunities.
Private Equity funds (especially Real Estate PE funds) typically reduce the risk profile by offering diversified investment portfolios managed by experienced fund managers. Thus, private equity funds provides the dual benefit of a defensive investment alternative as well as a hedge mechanism by offering an alternative asset class.
Classified under Category 3 of alternative investment funds, hedge funds are an aggressively managed portfolio of investments. Hedge Funds use several types of strategies such as leveraged, long, short and derivative positions in both domestic and international markets.