5 Types of Alternative Investment Platforms You Should Know About In 2023

Alternative investments are asset classes other than stocks, bonds, and cash investments. Private investors are turning to alternatives like real estate, crypto, and collectibles. Thus, leading to the demand for alternative investment platforms that support such investments. There are several platforms like co-investment platforms, fund structures, and online markets.

The following five types are some of the most recognized alternative investment platforms.

• Co-investment Platforms 

Co-investment platforms compile investment opportunities in one online location for investors. These investments include venture capital, private equity, and real estate. The investors have to share the risks and benefits of investing in these assets and ventures. Some co-investment platforms aim at HNWIs or savvy investors. Others aim at institutional investors and ordinary investors. 

• Funds

An investment fund is a pool of cash that a group of investors subscribes to. A fund manager then distributes these pooled funds to a variety of assets on their behalf. This allows investors to get many financial products at the same time. But, investors often have little say in this process. 

• Online Marketplace

An online marketplace is often known as an online auction. It is a type of e-commerce website that connects sellers and buyers. This platform type is frequently utilized in the alternative investment sector for collectibles like art, fine wine, etc. Collectibles can generate significant profits. Returns on investment-grade wine have exceeded the Global Equity Index by 1.88% over the last 15 years. This is with an average yearly return of 10.6%. 

• Trading Platforms

A trading platform is a software system utilized by investors. These get provided by brokerages and banks. Investors can conduct trades and track their market positions easily. Real-time quotes, interactive charts, premium research, and educational materials are some applications available.

• Direct Investment

Direct investment involves investing in a venture directly at the source. There is no usage of intermediaries. This strategy is most commonly used by experienced investors. If an investor chooses to fund an initiative directly, he has total control. He can select the opportunities accessible, when, and how much funding gets provided. 

Comparison of Risks and Rewards

Type of Alternative Investment Platform	Risks	Rewards
Co-Investment Platform	Involvement of  too many parties	Access to thoroughly vetted assets Due diligence procedure done by experts Lower Investment fees
Funds	Mismatch between investor values and capital allocation Risk of failure of new businesses	Access to varied investment  Lower fees imposed  Secondary market trading- high liquidity
Online Marketplace	Insufficient or incorrect product information Low regulation levels  Restricted liquidity	Access to global products  Liquidity
Trading Platforms	Assets traded are volatile.	Significantly lower investment fees Ease of making immediate deals Significant liquidity
Direct Investment	A huge concentration of capital and risk Lack of engagement with a professional intermediary	Total control over the decision-making. Investors do not have to pay fees

Bottom Line

Alternative investments have grown in favor, utility, and availability in recent years. Thanks to alternative investment platforms, individual investors can now easily and affordably explore. 

Assetmonk, for instance, is one of the best alternative investment platforms. A typical real estate investor may readily invest in premium commercial real estate. How so? Via syndication real estate or real estate syndication and real estate crowdfunding.

FAQs

Q1. What are the best alternative investments?

1. The answer relies on numerous aspects. It will also differ based on the demands of each investment. But, before selecting the ideal investment, investors must examine their liquidity and individual risk tolerance. 

Q2. What are some examples of alternative investments?

1. Alternative investments are any investments other than stocks and bonds. Notable alternative investments include art, gold, real estate, wine, and crypto.

Q3. Which is one of the best alternative investment platforms?

1. Some of the best alternative investment platforms include Yieldstreet, Fundrise, Crowdstreet, and Gatsby.

Q4. What is an alternative investment platform?

1. Alternative investments are asset classes other than stocks, bonds, and cash investments. So, alternative investment platforms support such investments to investors. These platforms help investors diversify their portfolios while assuming less risk than traditional funds. They also help first-time investors to get started.

Q5.What are examples of alternative investment funds?

1. Some examples of alternative investment funds are infrastructure funds, venture capital funds, and angel funds.

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