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Alternative funds are normally mutual funds. They are also known as exchange-traded funds (ETFs) that revolve around non-traditional securities such as real estate, commodities, as well as leveraged loans. The main reason investors choose alternative funds is because they are not as volatile or as risky as other investment opportunities.
Take real estate, for example. Investors primarily focus on investing on the land, and anything permanently fixed to it like buildings, as well as commercial and corporate facilities. This is done through direct investment, partnerships, or real estate investment trusts (REITs).
According to Yas Aloosy, alternative funds may also be used to invest in other assets, which are deemed real. These assets possess a tangible nature, whose values are taken from their substance and physical properties. Perfect examples of these tangible assets, otherwise known as “real assets,” would be public and private infrastructure, natural resources, precious metals, and commodities.
Yas Aloosy also notes that alternative funds may also be invested in real assets that are owned and operated by government offices or government-owned and controlled organizations of corporations such as transportation, communications, water and sewage, and electric systems – virtually anything that is vital to economic development.