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Investments that do not trade publicly on an organized
exchange. Examples include but are not limited
to partnership funds that focus on private equity,
venture capital, buyout, mezzanine financing,
natural resources or hedge funds.
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An
investment category comprising of nontraditional
(stocks and bonds) investments. Alternative Investments
can include futures & options (derivatives)
as well as hedge fund investments and is considered
riskier than traditional investments. As a general
rule, no more than 10% of your liquid net worth
(excluding home, furnishings, etc.) should be
allocated to alternative investments. This investment
should be considered risky, as daily equities
can fluctuate greatly and the value of your investment
can go down as well as up.
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Alternative
Investment Refers to investments in hedge funds.
Many hedge funds pursue strategies that are uncommon
relative to mutual funds. Examples of alternative
investment strategies are: long-short equity,
event driven, statistical arbitrage, fixed income
arbitrage, convertible arbritage, short bias,
global macro, and equity market neutral. Commodity
Trading Advisors are also part of the alternative
investment industry. |
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ALTERNATIVE
INVESTMENT MARKET :
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The Alternative Investments Market (AIM) is
a sub-market of the London Stock Exchange, allowing
smaller companies to float shares with a more
flexible regulatory system than is applicable
to the Main Market. AIM was launched in 1995
and has raised almost £21bn for more than
2,000 companies. Flexibility is provided by
less regulation and no requirements for capitalisation
or number of shares issued. Many companies have
since moved on to join the Main Market, though
a few have been reduced from the Main Market
to AIM (often due to fewer shares available
or loss of capitalisation).
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AIM has also started to become an international
exchange, often due to its low-regulatory burden,
especially in relation to the Sarbanes-Oxley
Act (which imposes regulatory costs on companies
listed in the US, including those without any
operations). As of October 2005 there were over
190 foreign companies listed on the Alternative
Investments Market. Issues of regulatory information
(such as company reports and profit warnings)
have arisen recently, with the LSE looking at
ways to deal with such problems and how to avoid
them if the AIM is to continue listing new foreign
companies.
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