Benchmark Investments

Overview

Alternative assets typically refer to investments that fall outside of the traditional asset classes commonly accessed by most investors, such as stocks, bonds, or cash investments. Due to their alternative nature, these investments may be less liquid than their traditional counterparts and may require a longer investment period before any material value is realized.

The Key Characteristics of Alternative Investments

Alternative investments cover a wide range of assets and strategies. Generally speaking, however, they are characterized by:

Low correlation to traditional investments like stocks and bonds
Higher return potential than traditional investments
More esoteric and oftentimes illiquid assets
Longer lock-up of periods, meaning shares or interests may not be able to be redeemed/sold on a daily basis. This helps allow for exposure to less liquid assets
Often complex investment structures and risk-return profiles
Typically, higher minimum investment requirements
Unique risk profile that should be understood prior to investing.

The Types of Investors Who may be Suited to Alternative Investments

Alternatives are not suitable for every investor. Given their unique risk-return profile and complex investment characteristics, they often are most attractive and more suitable for more sophisticated and higher-net-worth investors.

In addition to meeting minimum investment and suitability requirements, investors should also consider their time horizon, investment objectives and their ability to withstand periods of volatility before considering an allocation to alternatives.

Some Popular Alternative Investment Strategies

Alternative investments have grown in popularity over time. Today, alternatives include a spectrum of strategies, each designed to support a unique objective and with a different risk-return profile. Below are some of the most common.

Private Equity

Private equity investments (typically accessed through a limited partnership) take an ownership position in companies or securities that typically are not listed on a public stock exchange. The goal is to add value by providing capital to help new businesses grow and by restructuring existing businesses with operational inefficiencies that offer the potential to generate significant long-term gains.

Alternative Credit

Alternative credit investments refer to illiquid financing provided to borrowers that cannot access public credit markets or require non-standard, customized terms. Categories of lending within alternative credit include direct lending, mezzanine, distressed debt, and specialty financing.

Venture Capital

In exchange for an equity ownership stake, venture capital investors provide funding to early-stage start-ups they expect to grow substantially. The goal is to guide the firm with the intent of selling it either through acquisition or an initial public offering.

Real Estate

Real estate has evolved into a multi-faceted asset class that includes publicly-listed and private real estate investment trusts (REITs) and private commercial real estate debt. Real estate not only has a low correlation with equities, but is often viewed as a hedge against inflation.

Hedge Funds

Hedge funds are investment vehicles that use a range of non-traditional strategies (e.g., pairs trading and long-short strategies) in an effort to maximize the overall return potential and diversification of a portfolio. Some of these non-traditional strategies include:

Broadly AIF are categories in three category

Category I AIF

AIF that invest in early-stage ventures, startups, social ventures, Small and Medium Enterprises (SMEs), infrastructure or other sectors/areas considered by the government or regulators as socially or economically desirable are Category I AIF. Category I AIF investments include SME funds, venture capital funds, infrastructure funds, social venture funds and other such specified AIFs.

Under this category, AIFs are generally anticipated to have positive spillover effects on the economy. The funds for which the SEBI or Government of India (GOI) or other regulators in India might consider providing incentives or concessions are included under this category.

Category II AIF

AIFs that do not fall under Category I and III and do not undertake borrowing or leverage other than to meet the day-to-day operational requirements and are permitted in the SEBI (Alternative Investment Funds) Regulations, 2012 fall under Category II AIF.

AIF under this category includes debt funds or private equity funds, which receive no specific incentives or concessions from the GOI or any other regulator. The various types of funds, such as real estate funds, private equity funds (PE funds), funds for distressed assets, etc., are registered as Category II AIF.

Category III AIF

AIFs that employ complex or diverse trading strategies and employ leverage, including investment in listed or unlisted derivatives, fall under Category III AIF. AIFs such as hedge funds or funds that trade for making short term returns or other such funds that are open-ended and for which no specific concessions or incentives are received from the GOI or any other regulator are included under this category.

Presentations

MOSL Mid to Mega presentation

Disclaimer

Benchmark Investments only acts only as a mediator between clients and the company inviting/accepting PMS we do not run our own PMS & AIF

The information provided on this website is to help investors in their decision-making process and shall not be considered as a recommendation or solicitation of an investment or investment strategy.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

There are risks associated with fixed income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities.

Stock investments have an element of risk. High-quality stocks may be appropriate for some investments strategies. Ensure that your investment objectives, time horizon and risk tolerance are aligned with stocks before investing, as they can lose value.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

The contents herein mentioned are solely for informational and educational purpose only.

Please consult your CA / Tax expert for taxation before investing.

The contents herein above shall not be considered as an invitation or persuasion to trade or invest. We accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

The value of investments can fall as well as rise. You may get back less than what you originally invested.