What is an alternative investment?

An alternative investment is any investment outside the traditional categories of publicly traded stocks, bonds, and cash equivalents.

The major categories of alternative investments include private equity (ownership stakes in privately held companies), private credit (loans and debt instruments), venture capital (early-stage company financing), private real estate (direct property ownership and private real estate funds), hedge funds (actively managed strategies across various markets), commodities (physical goods like oil, gold, and agricultural products), and infrastructure (airports, toll roads, utilities).

Alternative investments share several common characteristics: they are typically less liquid than public market securities, subject to less regulatory disclosure, and accessible primarily to institutional investors and high-net-worth individuals through traditional channels, though this last point has changed meaningfully in recent years. Regulatory frameworks established by the JOBS Act of 2012, including Regulation A+ and Regulation Crowdfunding, have opened certain alternative investment categories to a broader range of investors, including those who do not meet the traditional accredited investor thresholds.