When we discuss traditional investments, we refer to those traded by financial institutions, such as banks and brokers. As they are linked to the financial economy, their variations are related to the market conditions in which they are inserted.
The stock market is a perfect example: when the market is good, the stocks tend to appreciate.
Alternative investments, however, often do not have a standard platform for trading. Therefore, they can happen through direct contributions or via investment funds.
Some of the main differences between alternative and traditional investments are?
- Relationship with the market: While traditional investments have a financial nature and depend on the market situation, alternatives do not have this correlation. This means that they are not affected by economic issues.
- Liquidity: Because they are not widely shared in the market and, consequently, less traded, alternative investments tend to have lower liquidity than traditional ones. This is one of the main features at Arbtrust with a 2-day liquidity.
- Participation: In the traditional market many shareholders are passive about their investments. The opposite happens in the alternative options, where there is greater participation.
For those interested in diversifying their portfolio and investing in alternative assets, there is a range of options to choose from.