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Types of alternative investment vehicles and derivatives

1. What are the different types of alternative investment vehicles?
2. Which one is the most preferable? Why?
3. What are derivatives?
4. How can they be used to manage a portfolio? Would you personally use derivatives in your portfolio? Why or Why not? (at least 350 words).

Solution Preview

Let's take a closer look at these interesting questions. I also attached two very informative resources for further readings and examples.

RESPONSE:

1. What are the different types of alternative investment vehicles?

Alternative investment funds include hedge funds, private equity funds, managed futures funds, and real estate funds, options, straddles, leaps, precious metals (bullion or shares), currency funds, direct participation programs (limited partnerships), and other funds that use derivatives-and represent one of the fastest growing segments of "assets under management" within the investment management sector. As opposed to traditional funds, which simply follow the market downwards, these products can produce returns in adverse conditions (http://74.125.95.132/search?q=cache:kChnhNU4UoEJ:www.cityandfinancial.com/assets/documents/20060105145027FINAL_Alternative_Investment_Fund__WEB.pdf+what+are+different+types+of+alternative+investment+vehicles%3F&cd=2&hl=en&ct=clnk&gl=ca&client=firefox-a).

2. Which one is the most preferable? Why?

The examples above of Alternative Investments are all considerations for anyone considering such additions to their portfolio. People develop a ...

Solution Summary

By addressing the questions, this solution discusses aspects of the different types of alternative investment vehicles and managing derivatives in ones portfolio. Supplemented with two related resoruces. References are provided.

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