Mention alternative investments and you may get a variety of reactions—are they alternative energy products? Hedge funds? Investments only for the super-rich? The reality is that many investors don’t know what an alternative investment is. Alternative investments (or “alts”) are generally those outside the traditional asset classes of stocks, bonds or cash.
While forms of alternative investments have been available for centuries, recent decades have seen the rapid development and increased use of alternatives among institutional investors (such as pensions and endowments) which have looked to alternative asset classes and strategies in an attempt to manage risk, improve diversification and provide more consistent returns.
The timeline below illustrates the evolution of alternative investments.
The alternatives strategies and asset classes mentioned are not suitable for all investors. Many alternative strategies use sophisticated and aggressive investment techniques such as leveraging, short selling and derivatives. The more you invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. The use of short selling involves increased risks and costs. You risk paying more for a security than you received from its sale. Theoretically, stocks sold short have the risk of unlimited losses. The use of derivatives such as futures, options and swap agreements may expose an investment to additional risks that it would not be subject to if you invested directly in the securities underlying those derivatives. Additionally, certain alternative strategies tied to hard assets such as commodities, currencies and real estate, may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates or factors affecting a particular industry, commodity or currency, –such as droughts, floods, weather, livestock disease, embargos, tariffs and international economic, political and regulatory developments. No investment strategy can guarantee a return in a declining market. Additionally, an investor could lose all or a substantial amount of their investment. For more information about these strategies and their risks please consult your financial advisor.
This material is not intended to be a comprehensive overview of the subject matters discussed. It is intended to be general in nature and should not be construed as investment advice or a recommendation of any specific security or strategy. Before investing in any of the investment products or strategies discussed, consult with your financial advisor to determine if they are appropriate for your objectives, risk tolerance, income level and investing time horizon.
Rydex SGI offers funds with investment strategies similar to those referenced on getalts.com.
Read the fund’s prospectus carefully before investing. It contains the fund’s investment objectives, risks, charges, expenses and other information. Download a prospectus or call 800.258.4332 for complete information.
The funds are distributed by Rydex Distributors, Inc. (RDI). Security Global InvestorsSM is the investment advisory arm of Security Benefit Corporation (Security Benefit). Security Global Investors consists of Security Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex Investments is the primary business name for PADCO Advisors, Inc. and PADCO Advisors II, Inc. SGI and RDI are affiliates and are subsidiaries of Security Benefit.
