Kerns Capital Management, Inc.

While Alternatives can offer higher returns potential, they are still susceptible to the same challenges faced by the equity and bond markets.

In recent years, alternative investments have faced challenges from low interest rates and inflated valuations, compared to high return expectations.

While it has become more accessible for individual investors to include alternative investments in their portfolios, there remain some barriers to entry. Typical key requirements are listed below:

Minimum investments

This can range from the thousands to tens or even hundreds of millions.

Lock-up periods

A minimum period during which the investor cannot redeem their capital. This could be a year, or 5 years, or anything in between.

Early redemption

Depending on the liquidity of the underlying asset, investors may be able to pay a penalty to redeem their investment early.

Illiquid investments and investment horizons

Private equity and real estate are typical examples of illiquid investments; where there are either physical assets or where, in the case of private equity, the underlying asset is a company, investors will not be able to redeem their investments before a specified date.