The term alternative investing is unlike other uses of the term alternative, such as alternative music, alternative publishing, or alternative movies. In all those instances, “alternative” implies something not in the mainstream, or something that is more budget oriented, and more likely to be done in lower-scale venues. This is not the case with alternative investing.
It may have been the case more than a decade ago, but even then, when engaging in alternative investing, it’s not so much a stepping-down, or finding something quirky or different. Alternative investing, for the most part, has always been a means of finding other meaningful sources of investing capital. That’s it.
A departure from traditional investing
The reason the term alternative investing is used is because, in essence, traditional investing, especially investing one does in public markets and stock markets, comes with many rules and regulations that ostensibly are for the purpose of disclosure, openness and public awareness, but can also limit the options for various investors, including large and institutional investors.
So, any type of investing that departs from this more traditional approach will be labelled “alternative” but it’s more an alternative to past practices than it is an alternative to mainstream norms. In fact, alternative investing has essentially become mainstream, and for many reasons.
Alternative investing started to get noticed after the financial crisis of 2008, which was in many ways a failure of the established financial and investment systems. So, as a way of hedging against the failures of such systems, investors started going the alternative route in order to diversify their portfolios in case of another mainstream financial collapse.
It’s about diversification, and more
In fact, alternative investing, if nothing else, can be used as a general form of diversification; to protect investors from stresses experienced with other types of investments. But it doesn’t just have to be about diversification. Alternative investing puts the power of tailor-made opportunities in the hands of forward-looking investors looking for better-than-average returns without undue risk.
And just because it’s called alternative investing doesn’t mean it doesn’t come with regulation and oversight. It just means that much of the scrutiny over alternative investment opportunities come from the investors themselves as well as the investment firms they work with, instead of traditional rules that make unique opportunities less accessible and perhaps less rewarding.
ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.