Getting Started in Alternative Investments

Acknowledgments ix

About the Authors xiii

Introduction 1

Chapter 1 Introduction to Alternatives 5

1.1 What Are Alternatives? 6

1.2 Investing in Alternatives 8

1.3 Diversification 34

1.4 Regulation 36

1.5 Summary 41

Notes 42

Chapter 2 Traditional Alternatives 45

2.1 Venture Capital 46

2.2 Private Equity 55

2.3 Hedge Funds 66

2.4 Infrastructure 79

2.5 Land and Commodities 82

2.6 Funds of Funds 88

2.7 Summary 89

Notes 90

Chapter 3 Real Estate 93

3.1 The Global Real Estate Market 93

3.2 Structure of This Chapter 94

3.3 Characteristics of Real Estate 95

3.4 Classifying Real Estate Segments 96

3.5 Real Estate Valuation 101

3.6 Due Diligence 105

3.7 The Four Quadrants of Real Estate Investment 106

3.8 Future Trends in Real Estate 113

Chapter 4 Modern Alternatives 119

4.1 Private Credit and Alternative Finance 119

4.2 Insurance- Related Finance 128

4.3 Impact Investing 132

4.4 Blockchain, Coins, and Non- Fungible Tokens 136

4.5 Real Estate Tokenization and the Metaverse 143

4.6 Collectibles 151

4.7 Other Opportunities 159

Notes 163

Chapter 5 Building Portfolios 167

5.1 The Portfolio Management Process 167

5.2 Traditional Portfolios 170

5.3 Mean- Variance Optimization 171

5.4 Adding Alternative Investments 173

5.5 The Endowment Model 174

5.6 Risk Budgets, Risk Parity 174

5.7 Summary 176

Notes 177

Appendix Real Estate Investments 179

A.1 The Characteristics of Real Estate as an Asset Class 179

A.2 Classifying Real Estate Segments 183

A.3 Analyzing the Real Estate Segments 186

A.4 Real Estate Valuation 214

A.5 Due Diligence 228

A.6 The Four Quadrants of Real Estate Investment 229

Notes 272

About the Website 273

Index 275