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Alternative Investments


Alternative investments are understood to be non-traditional capital investments or capital investment strategies. Accordingly, alternative investments are commonly used to describe investments outside the equity and bond spectrum.


Since there is no standard definition, alternative investments are usually described by their investment areas. For example, investments in hedge funds, private equity, commodities or real estate are considered alternative investments. Common to all these investments is an increased return potential compared to traditional equity investments with risk profiles that are more difficult to assess at the same time. Alternative investments are often highly complex investment products or use particularly innovative investment strategies. This in turn can have a direct impact on the liquidability of such investment products. Where investors in traditional asset classes can react to sudden market movements at any time and sell their units, units in many alternative investments cannot be readily traded. Investors in a closed-end real estate fund, for example, cannot easily exit the investment and withdraw their capital investment. In these cases, many investors who need quick liquidity often only have the option of the secondary market.

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