We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
HR

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is Alternative Management?

Gerelyn Terzo
By
Updated: May 16, 2024
Views: 8,692
Share

Professional money management can take many different forms. Alternative management is a corner of the field of investment management, and it encompasses different types of investment vehicles. Many large institutional investors, including endowments, pension funds and corporations, rely on alternative management to drive returns that are better than those of more traditional investments. Alternative money management is non-traditional, unlike the management of a stock or bond portfolio. Instead, these investment professionals oversee non-traditional securities and investment vehicles, such as hedge funds, private equity and real estate, and they earn fees based on the success of their management style.

Alternative management can be a lucrative career, albeit a high-pressure one. Fees in this category of investment management are higher than in traditional asset classes and can include one layer for management and a second based on the performance of the fund. If an alternative manager fails to produce consecutively higher profits or at least beat the general market performance, the second layer of fees can be waived.

In alternative management, there are different categories of investment types. A hedge fund is a lightly regulated investment fund with combined assets from many investors, including large financial institutions and wealth individuals. Hedge fund managers can trade traditional assets but apply complex strategies to those investments, such as betting that a stock will decline in value.

Private equity is another form of alternative management. It is a business that builds portfolios by acquiring assets and entire companies, holding them for a period of five to seven years while attempting to improve upon the business, then selling the assets or entity for a profit. Often, these portfolio managers have some type of expertise in the types of companies that are acquired, such as retail. Private equity management has a hand in the management of the acquired company and in turning a struggling company around, so this is where knowledge of the industry comes into play.

Real estate also is under the alternative management umbrella. The fund managers involved in real estate either buy property and assets directly or they invest via an index fund, known as a real estate investment trust (REIT), which is an index fund comprised of many real estate securities and commercial properties. An REIT trades in the stock market, similar to an individual stock. Alternative managers can buy and sell REITs more easily than physical real estate assets can be bought and sold.

Share
SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Gerelyn Terzo
By Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in Mass Communication/Media Studies, she crafts compelling content for multiple publications, showcasing her deep understanding of various industries and her ability to effectively communicate complex topics to target audiences.
Discussion Comments
Gerelyn Terzo
Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in...
Learn more
Share
https://www.smartcapitalmind.com/what-is-alternative-management.htm
Copy this link
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.