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Alternative mutual funds are SEC-registered, publicly-traded mutual funds that employ complex investment and trading strategies. Also called alt funds or liquid funds, alternative mutual funds hold non-traditional investments. As their name implies, alt funds seek to accomplish the fund’s objective through non-conventional investment and trading strategies. Alternative mutual funds invest in assets like leveraged loans, global real estate, start-up companies, commodities, and unlisted securities that provide exposure beyond the conventional stocks, bonds, and cash. Understanding Alternative Investments Any financial investment that does not fall into one of the categories of traditional investments is an alternative investment . Private equity or venture capital, managed futures, hedge funds , commodities, art and antiques, and derivative contracts are all examples of alternative investments . Institutional investors or high net worth individuals/ accredited investors hold most alt...

The main goal of investing is maximizing returns. With so many investment options available, it can be daunting to determine the best investment vehicle. Among the investment products available, hedge funds and mutual funds are the most common. Both funds provide investors with the benefit of diversification by allowing them access to a pool of investment funds. Both funds are also portfolios managed by a portfolio manager and aim to achieve high returns through diversification. Pooling of funds means that a fund manager or a group of managers use the investment capital obtained from multiple investors to invest in securities that align with a specific investment strategy.   Hedge Funds Like mutual funds , hedge funds have a basic pooled structure. However, hedge funds are provided privately; therefore, they take higher risk positions to obtain higher returns for established investors. As such, hedge funds may use leverage, options, short-selling, and other alternative strategie...

What Are Hedge Funds? A hedge fund is not a specific type of investment; it is a vehicle for investment. A hedge fund pools money from investors to invest in costly, high-risk, but high-reward securities and other opportunities. Unlike mutual funds, hedge funds are not heavily regulated. They have more leeway, allowing fund managers to pursue investments and strategies that could increase the risk of investment losses. Hedge fund managers use a wide range of strategies, including trading esoteric assets and buying with borrowed money in an effort to achieve high investment returns for their clients. Hedge funds are considered risky investments accessible only to accredited investors, usually high net worth individuals (HNIs) and institutions who can afford the high fees and the risks involved. Understanding the Hedge Fund Initially, hedge funds solely focused on hedging or minimizing the risk of an investment. The managers of conventional investment funds would devote a portion of...