An alternative fund is a fund investing in a portfolio of alternative assets or operating a niche strategy which is not correlated with the markets.
Investing in alternatives through a fund allows private investors to spread risk across multiple underlying alternative investments, with the aim of reducing volatility.
As alternatives tend to be illiquid and there is no public market to buy and sell shares on, investors need to match their liquidity requirements with the fund strategy. For example, a real estate fund may take time to sell underlying assets in order to return investors' capital.
At Connection Capital we have offered private investors access to a wide range of alternative funds which usually only accept institutional investors. Strategies have included litigation funding, private equity, venture capital, special situations, distressed debt, collateralised loan obligations and more.