What alternative investing actually means

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.


A viable alternative to traditional investing

The term alternative investments doesn’t have the same meaning it once did. In fact, perhaps not too long ago, if someone came to you with the proposition of investing in something alternative, and you were playing a word association game at the time, terms that might also pop into your head include risky, dubious or even strange.

The fact is that today’s world of investments isn’t what it was thirty years ago, twenty years ago, or even as recently as a decade ago. Indeed, there has been what one can consider a significant shift from so-called traditional investments to the growing category of alternative investing. Let me explain.

A shift from stocks and bonds

Back in the day, so-called traditional investments, including bonds and stocks, could deliver some relatively high yields with relatively low risks. However, in today’s investment landscape, finding these high-yield, low-risk opportunities among stocks and bonds has become an exceedingly difficult proposition. Bond yields are not what they used to be, and neither are “high income” stocks, which now often have lower values than yesteryear, and correspondingly lower-paying dividends.

As a result, investors seeking the golden grail of high yields with lower risk have had to look elsewhere, and that’s where alternative investment firms have filled the gap — not with fly-by-night investment schemes and tricks, but with proven investment strategies that meet the needs of increasingly demanding investors.

Finding the right alternatives

The trick, however, is that these alternative investments are more challenging to manage, so they require a developed expertise in the field, whether the underlying investments involve real estate, mortgages, private-debt funds — you name it.

Consequently, investors need to be more discriminating than ever to find these rewarding investment opportunities. But, if the right opportunities are found, and are managed by qualified experts, than the returns are as formidable as any traditional investment has ever been, and more.

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