Alternative Investments
Alternative investment strategies are unique and have different return and risk characteristics as compared to more traditional asset classes. Therefore, only clients who are considered an accredited investor or qualified purchaser are offered these unique ideas.
Who is an accredited investor?
An accredited investor is a person who has either: (1) earned more than $200,000 as income (or $300,000 together with a spouse) in each of the prior two years and reasonably expects the same for the current year or (2) a net worth of over $1 million — this could be alone or together with a spouse (but excluding the value of the person’s primary residence.)
Who is a qualified purchaser?
A qualified purchaser is defined for individuals and family-owned businesses as owning $5 million in investments, and, for entities, managing at least $25 million in investments for other qualified purchasers or being exclusively owned by qualified purchasers.
Alternative investment strategies may include the following:
1. Real Estate
Real estate is one of the most widely owned asset classes of the wealthy. And there's a good reason for that. In addition to being an excellent hedge against inflation, investment real estate has provided both solid capital appreciation over time and has also delivered an income stream from tenant leases on income-based property. It provides an excellent diversification to a traditional portfolio. We offer many different types of real estate offerings to our clients, including multifamily housing, industrial, infrastructure, data centers, self storage, specialized medical and many more.
2. Private Equity
Whereas companies traditionally traded on the stock market are owned by the public, of course there are many more investment options to consider on the private market. Private equity is composed of funds and investors that directly invest in private companies. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund business expansion, help to create new technology, make acquisitions, or just about anything the company deems necessary to help it grow and operate at a higher level.
3. Private Credit
Private credit is an asset class that offers non-bank lending and can also be referred to as "direct lending" or "private lending.” Private credit has been one of the fastest-growing asset classes because when private companies need funds to expand their businesses’ day-to-day operations, they may not have access to the same financing options as public companies which can issue stock or bonds to the public market. Private companies borrow the money they need by obtaining loans from private lenders (you) and in exchange make interest payments along with repaying the loan’s principal upon maturity.
4. Hedge Funds
By their nature, hedge funds are hard to define because they include a large subset of strategies which are not easily characterized. As Investopedia defines them, Hedge funds are alternative investments using pooled funds that employ different strategies to earn active returns, or alpha, for their investors. They take more risk and are more illiquid than traditional investment strategies. Hedge funds may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Sierra Ocean offers to qualified investors more than 12 hedge fund strategies.