Private Alternative Investments

Frequently Asked Questions

Is private equity an alternative investment?

Yes, private equity is considered to be an alternative investment. Private equity refers to investment in private companies, either through buying a stake in the company or by providing growth capital. Private equity investments are considered to be alternative investments because they are outside the traditional stock and bond markets and can offer the potential for higher returns.

Is private debt an alternative investment?

Yes, private debt is considered to be an alternative investment. Private debt refers to investments in debt securities issued by private companies, rather than publicly traded companies. Private debt can offer higher returns compared to traditional fixed-income investments, but also comes with higher risk.

What is the difference between private equity and alternative investments?

Private equity is one type of alternative investment, but not all alternative investments are private equity. Alternative investments refer to investments that are outside the traditional stock and bond markets, and can include private equity, private debt, real estate, hedge funds, and commodities, among others. The main difference between private equity and alternative investments is that private equity specifically refers to investment in private companies, while alternative investments refer to a broader category of investments that includes private equity, as well as other types of investments.

What are the risks involved with private alternative investments?

Private alternative investments typically come with higher risks compared to traditional investments, such as stocks and bonds. Some of the risks associated with private alternative investments include:

Lack of liquidity

Private alternative investments may be less liquid compared to publicly traded investments, making it more difficult to sell the investment when you need to.

Higher volatility

Private alternative investments can be more volatile compared to traditional investments, which means that the value of your investment can fluctuate more rapidly and can be harder to predict.

Illiquidity risk

If the underlying assets of the investment are illiquid, it may be more difficult to sell the investment or obtain accurate valuations.

Manager risk

With private alternative investments, a significant portion of the return depends on the skill and expertise of the fund manager. If the manager's performance is poor, the value of the investment can suffer.

How can I invest in private alternative investments in Canada?

In Canada, private alternative investments are typically only available to accredited investors. To invest in private alternative investments, you need to first meet the income and net worth requirements to become an accredited investor. Once you are an accredited investor, you can invest in private alternative investments through private equity or real estate funds, or by directly investing in private companies or real estate projects. It is important to carefully consider the investment and to consult with a financial advisor before investing in private alternative investments.Another way to gain access to private alternative investments is to invest with a licensed portfolio manager.

What is the minimum investment amount required for private alternative investments in Canada?

The minimum investment amount required for private alternative investments can vary widely and depends on the specific investment. Some private equity funds or real estate funds may have minimum investment requirements of $50,000 or more, while direct investments in private companies or real estate projects may require minimum investments of several hundred thousand dollars or more.