--- title: What is Alternative Asset Management? description: The widely accepted MPT (Modern Portfolio Theory) expounded a mathematical framework for building a portfolio of stocks and bonds that maximizes expected return in accordance with an individual's acceptance of risk. image: https://www.realized1031.com/hubfs/Images/Blog/consultation-paperwork-office-people-is917336538.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # What is Alternative Asset Management? Posted Nov 2, 2023 ![consultation-paperwork-office-people-is917336538](https://www.realized1031.com/hs-fs/hubfs/Images/Blog/consultation-paperwork-office-people-is917336538.jpg?width=750&height=393&name=consultation-paperwork-office-people-is917336538.jpg) Traditionally, investment portfolios have included stocks, bonds, and cash. The widely accepted MPT ([Modern Portfolio Theory](https://www.realized1031.com/blog/alternative-assets-what-are-they-and-should-they-be-in-my-portfolio)) expounded a mathematical framework for building a portfolio of stocks and bonds that maximizes expected return in accordance with an individual's acceptance of risk. Someone willing to accept more risk would choose a portfolio weighted toward stocks. For a risk-averse investor, the portfolio would contain more fixed-income products like bonds. The default weighting for a portfolio was long ago set at 60 percent stocks and 40 percent income. This division is notably successful over long periods, but other configurations can also be favorable. However, investment options include other potential choices, and these alternatives are far more widely available than they were in previous decades. Average investors today can easily choose investments that once were only available for high-net-worth or institutional investors. ### What are alternative investments? In short, anything that is not a stock, bond, cash, or cash alternative is an alternative investment. Some are ancient, like collectibles and commodities, while others are remarkably new, like non-fungible tokens (NFTs) and cryptocurrency. Other alternative categories include real estate (direct and passive investments), resources like oil and natural gas, precious metals, venture capital, and private equities or hedge funds. ### Real estate is a traditional alternative. While some time-honored alternatives like wine and collectibles have an extremely long time horizon for appreciation, and others like coins and jewelry require notable expertise, real estate is an option that is widely accessible and reliable over time. [Real estate](https://www.realized1031.com/blog/what-to-consider-before-investing-in-real-estate-and-other-alternatives) is the first introduction for many individuals who choose alternative investments. Many likely don't consider it an alternative but, instead, a crucial part of their diversification strategy. However, like other alternative assets, real estate is illiquid and not well-correlated to market performance. Real estate investments are available in several forms. Investors can purchase assets like rental homes and commercial property to either manage personally or outsource the operations to a property manager. However, investors can also participate in real estate through REITs (Real Estate Investment Trusts), DSTs (Delaware Statutory Trusts), and real estate syndications. These co-ownership options allow investors to pursue assets beyond their individual reach and pursue the benefits of real estate investment without daily involvement. ### Are alternative investments a good choice? As with any investment, whether an alternative is appropriate for any particular investor depends on that person’s risk appetite and tolerance, timeline, and investment goals. For those seeking very high return potential and an increased risk tolerance, some alternatives like NFTs may be attractive. For investors with a more conservative risk appetite, hedge fund strategies may offer the right balance between growth and stability. Daniel Maccarrone, Co-head of Morgan Stanley’s Global Investment Manager Analysis, suggests that hedge fund strategies are a viable option to replace both stocks and bonds, able to mitigate portfolio losses as well as enhance returns.1 While interest in alternative assets is growing, the participation by individual investors is still minimal when compared with participation by institutional investors like pension funds and endowments. However, billionaires seem to realize the importance of alternatives, with over half of their assets invested in various alternatives.2 According to[ wealthmanagement.com](https://www.wealthmanagement.com/alternative-investments/alternative-investments-are-increasingly-popular-tool-client-portfolios), interest in many alternatives is growing, with more than half of [wealth advisors](https://www.realized1031.com/blog/what-is-the-difference-between-asset-management-and-wealth-management) using some alternatives to seek the following performance objectives: -       Manage risk -       Protect against inflation -       Grow capital -       Generate income -       Diversify holdings Wealthmanagement.com recently reported the results of a survey of financial advisors that noted that while even illiquid alternatives are increasingly popular, digital assets and cryptocurrency have recently begun to slide.3 For any investor, it's wise to maintain a balanced portfolio that aligns with their investment goals and risk tolerance. It’s a good idea to consult a wealth advisor or other trusted professional. [1][ https://www.morganstanley.com/articles/alternative-investments-key-themes](https://www.morganstanley.com/articles/alternative-investments-key-themes), retrieved October 2023 [2][ https://www.nasdaq.com/articles/alts-for-all%3A-the-growth-of-alternative-investments-explained](https://www.nasdaq.com/articles/alts-for-all%3A-the-growth-of-alternative-investments-explained), June 15, 2022, retrieved October, 2023 [3][ https://www.wealthmanagement.com/alternative-investments/alternative-investments-are-increasingly-popular-tool-client-portfolios](https://www.wealthmanagement.com/alternative-investments/alternative-investments-are-increasingly-popular-tool-client-portfolios), retrieved October 2023   *This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.* *Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.* *All real estate investments have the potential to lose value during the life of the investment. All financed real estate investments have the potential for foreclosure.* *Risk tolerance is an investor’s general ability to withstand risk inherent in investing. There is no guarantee a recommended portfolio will accurately reflect your tolerance to risk.* *Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.* Learn Ways To Help Build Long-Term Real Estate Wealth [![Get Tips For Managing Real Estate Wealth](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-eBook-250c.jpg?width=250&height=250&name=IPWM-eBook-250c.jpg "Learn new ways to use real ...") ](https://www.realized1031.com/blog/what-is-alternative-asset-management#blogform) Download eBook ---   --- ### Get Tips For Managing Real Estate Wealth ![Learn Ways To Help Build Long-Term Real Estate Wealth](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-eBook-550.jpg?width=550&height=650&name=IPWM-eBook-550.jpg) Learn new ways to use real estate to pursue your wealth goals. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Traditionally, investment portfolios have included stocks, bonds, and cash. The widely accepted MPT (Modern Portfolio Theory) expounded a mathematical framework for building a portfolio of stocks and bonds that maximizes expected return in accordance with an individual's acceptance of risk. Someone willing to accept more risk would choose a portfolio weighted toward stocks. For a risk-averse investor, the portfolio would contain more fixed-income products like bonds. The default weighting for a portfolio was long ago set at 60 percent stocks and 40 percent income. This division is notably successful over long periods, but other configurations can also be favorable. However, investment options include other potential choices, and these alternatives are far more widely available than they were in previous decades. Average investors today can easily choose investments that once were only available for high-net-worth or institutional investors. What are alternative investments? In short, anything that is not a stock, bond, cash, or cash alternative is an alternative investment. Some are ancient, like collectibles and commodities, while others are remarkably new, like non-fungible tokens (NFTs) and cryptocurrency. Other alternative categories include real estate (direct and passive investments), resources like oil and natural gas, precious metals, venture capital, and private equities or hedge funds. Real estate is a traditional alternative. While some time-honored alternatives like wine and collectibles have an extremely long time horizon for appreciation, and others like coins and jewelry require notable expertise, real estate is an option that is widely accessible and reliable over time. Real estate is the first introduction for many individuals who choose alternative investments. Many likely don't consider it an alternative but, instead, a crucial part of their diversification strategy. However, like other alternative assets, real estate is illiquid and not well-correlated to market performance. Real estate investments are available in several forms. Investors can purchase assets like rental homes and commercial property to either manage personally or outsource the operations to a property manager. However, investors can also participate in real estate through REITs (Real Estate Investment Trusts), DSTs (Delaware Statutory Trusts), and real estate syndications. These co-ownership options allow investors to pursue assets beyond their individual reach and pursue the benefits of real estate investment without daily involvement. Are alternative investments a good choice? As with any investment, whether an alternative is appropriate for any particular investor depends on that person’s risk appetite and tolerance, timeline, and investment goals. For those seeking very high return potential and an increased risk tolerance, some alternatives like NFTs may be attractive. For investors with a more conservative risk appetite, hedge fund strategies may offer the right balance between growth and stability. Daniel Maccarrone, Co-head of Morgan Stanley’s Global Investment Manager Analysis, suggests that hedge fund strategies are a viable option to replace both stocks and bonds, able to mitigate portfolio losses as well as enhance returns.1 While interest in alternative assets is growing, the participation by individual investors is still minimal when compared with participation by institutional investors like pension funds and endowments. However, billionaires seem to realize the importance of alternatives, with over half of their assets invested in various alternatives.2 According to wealthmanagement.com, interest in many alternatives is growing, with more than half of wealth advisors using some alternatives to seek the following performance objectives: Manage risk Protect against inflation Grow capital Generate income Diversify holdings Wealthmanagement.com recently reported the results of a survey of financial advisors that noted that while even illiquid alternatives are increasingly popular, digital assets and cryptocurrency have recently begun to slide.3 For any investor, it's wise to maintain a balanced portfolio that aligns with their investment goals and risk tolerance. It’s a good idea to consult a wealth advisor or other trusted professional. [1] https://www.morganstanley.com/articles/alternative-investments-key-themes, retrieved October 2023 [2] https://www.nasdaq.com/articles/alts-for-all%3A-the-growth-of-alternative-investments-explained, June 15, 2022, retrieved October, 2023 [3] https://www.wealthmanagement.com/alternative-investments/alternative-investments-are-increasingly-popular-tool-client-portfolios, retrieved October 2023 This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. All real estate investments have the potential to lose value during the life of the investment. All financed real estate investments have the potential for foreclosure. Risk tolerance is an investor’s general ability to withstand risk inherent in investing. There is no guarantee a recommended portfolio will accurately reflect your tolerance to risk. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.", "articleSection" : [ "Financial Planning" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-11-03T00:00:00+0000", "datePublished" : "2023-11-03T00:00:00+0000", "description" : "The widely accepted MPT (Modern Portfolio Theory) expounded a mathematical framework for building a portfolio of stocks and bonds that maximizes expected return in accordance with an individual's acceptance of risk.", "headline" : "What is Alternative Asset Management?", "image" : { "@type" : "ImageObject", "height" : 393, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Images/Blog/consultation-paperwork-office-people-is917336538.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/what-is-alternative-asset-management", "name" : "What is Alternative Asset Management?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Images/Blog/consultation-paperwork-office-people-is917336538.jpg" } ```