Alternative Investments
Alternative investments are investments other than stocks and
bonds that typically do not trade publicly on an organised
exchange.
The largest alternative investment sector is hedge funds but the
term also covers funds that focus on private equity, venture
capital and mezzanine finance.
A hedge fund used to be a fund that could go long and short of
stocks and bonds, hence the "hedge" connotation, but has come to
define unregulated investment pools. Typically structured as
private partnerships rather than as corporations, hedge funds today
pursue unconventional investment strategies in all sectors of the
financial markets. Hedge funds can use leverage to target outsize
returns and are therefore considered more risky than traditional
fund management styles.