Alternative Investments

What are Alternative Investments?

What are alternatives and how do they differ from the traditional asset classes such as equities and fixed income?

An alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash. Alternative investments include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities along with real estate, renewable energy projects, new breed tech Med,Bio,Financial etc.

A simple definition of what makes up an alternative asset class is; an investment that is not either a share that is listed on an exchange or a fixed income security.

Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, lack of regulation, and degree of risk.

Next - Traditional vs Alternative

Traditional vs. Alternative Investments

Traditional investments are publicly traded investments in stocks, bonds, or cash. The traditional method of investing is via public markets, where companies sell shares to the general population via stocks exchanges, such as the FTSE, NYSE, and SSE. These types of investments are heavily regulated by financial authorities such as the SEC (Securities Exchange Commission) or the FCA (Financial Conduct Authority).

An alternative investment is a financial asset that does not fall into one of the three traditional investment categories. Alternative investments are complex and not heavily regulated. For this reason, most alternative asset investments are held by institutional investors or accredited, high-net-worth individuals.

Due to their lack of regulation, private markets are notoriously opaque compared to public markets. For example, private companies are under no obligation to reveal earnings or financial information, or report to shareholders, which means that information on these types of assets can be hard to find. This is why Preqin exists: to bring transparency and facilitate understanding across alternative assets with comprehensive data and best-in-class analytical tools.

Next - Alternative Universe

Alternative Universe

Alternative Universe
Next - Case Study

Case Study

XOP is a Global family office that approached Claremont to gain access to a range of alternative investments. The family office installed mandate that instructed Claremont to collate all investments opportunities in around environmental, social & corporate governance (ESG) both project based and private companies pursuing listing on a stock exchange.

A portfolio of open-investment was presented to the client including:
• Direct investment into a solar power plant in Indonesia with 100% of production contracted to the power grid IRR 13.5% (variable)
• Eco housing development project in Wellington, New Zealand, building 350 sustainably built luxury condos IRR 16% (variable)
• Pre IPO acquisition of Stock in Impossible foods IRR over a 4.5 month period 40% (SPAC listing rounds ongoing)
• Biomass Waste to fuel project In Canada Green bonds to convert traditional Diesel to BioFuel IRR 17% (based on $5million invested)

The client had liquid funds in the UAE, the UK and in Germany. These funds needed to all be converted to USD as the required
investment currency. Escrow services were also required for the majority of the transfer of funds. These two services were provided by Claremont Compote Services.

Claremont facilitated all Compliance and Due diligence procedures for the placement of the investment funds and continually work with our global investment partners to provide new opportunities in a broad range of alternative assets

Next - Risk Disclaimer

Risk Disclaimer

  • Alternative investments may not be suitable for all clients
  • It is important to note that the capital value of, and income from, any investment may go down as well as up and you may not get back the full amount invested.
  • Investors in alternative investments should bear in mind that these products can be highly speculative and may not be suitable for all clients
  • Investors should ensure they understand the features of the products and fund strategies and the risks involved before deciding whether or not to invest in such products
  • Such investments are generally intended for experienced and financially sophisticated investors who are willing to bear the risks associated with such investments, which can include: loss of all or a substantial portion of the investment; lack of liquidity in that there may be no secondary market for the fund and none may be expected to develop; volatility of returns; prohibitions and/or material restrictions on transferring interests in the fund; absence of information regarding valuations and pricing; delays in tax reporting; key man and adviser risk; limited or no transparency to underlying investments; limited or no regulatory oversight; and less regulation and higher fees than mutual funds
  • You should consult your professional advisers before investing
  • All decisions regarding the tax implications of your investments should be made in connection with your independent tax adviser