Understanding Alternative Investments

What’s the Alternative?

3 min read

Brought to you by Sound Choices - AGF Education for Investors and Advisors

Alternative investments differ from traditional long-only equity, fixed income or cash investments and can refer to either alternative asset classes or alternative strategies (approaches to investing).

Alternative Asset Classes

Here are some common examples of alternative asset classes:

  • Real estate / REITS – residential, office, specialty
  • Infrastructure – airports, highways
  • Precious Metals – gold, silver, copper
  • Commodities – oil, agricultural products
  • Private Equity – companies that have not been listed on a public exchange
  • Private Debt – debt investments that are not issued or traded in an open market

Alternative Strategies

There are several different kinds of alternative strategies – here are a few of the most common:

  • Long/Short – Take both long and short positions while maintaining net-long exposure.
  • Market Neutral – Take both long and short positions in equal weights.
  • Managed Futures – Take long or short positions using derivative products.
  • Multi-Strategy – Combine a portfolio of different alternative strategies.

Why consider alternative investments?

Investors use alternatives for a variety of reasons depending on their investment objectives. Because alternatives tend to behave differently than typical equity and fixed income investments, adding them to a portfolio comprised of traditional asset classes may provide investors with several potential benefits:

Diversification through low to non-correlated return sources

Alternatives tend to have low correlation to traditional asset classes like publicly listed equities and fixed income.

Downside protection and capital preservation

Employing alternatives within a portfolio may help to shield investors from a decline in value when markets are stressed.

Greater risk-adjusted returns

Alternatives have been shown to offer opportunities to enhance the risk-adjusted returns of well-diversified portfolios.

Hedging against rising interest rates or inflation

Alternatives can provide a hedge against inflation or rising interest rates due to their uncorrelated risk and return profiles relative to these economic variables.

To learn more about alternative investments, contact your financial advisor.


Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. This information is not meant as tax or legal advice. Investors should consult a financial advisor and/or tax professional before making investment, financial and/or tax-related decisions.


® ™ The “AGF” logo and all associated trademarks are registered trademarks or trademarks of AGF Management Limited and used under licence.

RO 3153919
Published November 1, 2023