Comparing Investment Vehicles
The chart below compares characteristics of traditional and private investment vehicles.
| |
Private Equity (includes Venture Capital) |
Hedge Funds |
Direct Investment in Assets |
ETFs |
Mutual Funds |
| Liquidity |
Periodic, at the discretion of the advisor (monthly, quarterly, annually or longer) |
Periodic, at the discretion of the advisor (monthly, quarterly, annually or longer) |
Varies, depending on asset class |
Typically daily |
Typically daily (though certain fees may apply for early redemption) |
| Taxation |
May be very complex |
May be very complex |
Taxation varies by asset class |
Taxed on capital gains (plus income tax on any dividends) |
Taxed on personal capital gains and also if the fund realizes a gain (plus income tax on any dividends) |
| Transparency |
Holdings available at the discretion of a fund’s management |
Holdings available at the discretion of a fund’s management |
Holdings are typically clear |
Holdings typically available daily |
Holdings available at least quarterly |
| Registration Requirements |
SEC registration not required |
SEC registration not required |
N/A |
Must register with SEC |
Must register with SEC |
| Fees |
1-2% management and 20% performance annually, but may vary widely and could be much higher |
Typically 2% management and 20% performance annually1 |
Transaction fees vary by asset class—fees may include account opening, transaction and management |
0.57% on average, plus brokerage commission2 |
0.99% on average, plus any applicable sales charges3 |
1 Source: www.sec.gov
2 Source: Morningstar, as of 12/31/2009
3 Source: 2009 Investment Company Fact Book
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.
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