Operational due diligence (ODD) is one of the most important — and most overlooked — components of evaluating an alternative investment. While investors often focus on performance, strategy, or market outlook, operational risk is frequently the true cause of catastrophic fund losses. History is filled with examples where investors lost money not
Real estate is one of the oldest and most widely held investments in the world — yet it behaves very differently from stocks, bonds, commodities, or even private equity. Its characteristics make it a unique asset class with its own set of risks, return drivers, and structural features that every investor
The world’s most successful institutional investors — including Yale, Harvard, Princeton, Stanford, and major foundations — all rely on a powerful framework known as the Endowment Model. It is one of the most influential portfolio strategies ever created because it consistently outperforms traditional allocations like the 60/40 portfolio over long
The Sharpe Ratio is one of the most widely used metrics in investing — yet most investors misunderstand what it actually tells them. It isn’t just a measure of performance. It’s a measure of risk-adjusted performance. In other words, the Sharpe Ratio answers a simple question: “How much return
1. What Are Alternative Investments? Alternative investments are assets outside traditional public stocks, bonds, and cash. They include: * Private equity * Venture capital * Hedge funds * Private credit * Real estate (equity & debt) * Infrastructure * Commodities * Natural resources * Farmland & timberland * Collectibles (art, wine, watches, cars) * Cryptoassets * Royalty and revenue share agreements * Litigation
Market-neutral investing is one of the most important techniques in alternative asset management. Rather than betting on the market going up or down, a market-neutral strategy aims to eliminate market direction entirely, isolating the manager’s skill in selecting winning and losing positions. The goal is simple and powerful: Generate
Hedging is a core skill in alternative investing. It’s how hedge funds protect capital, manage volatility, and generate consistent performance even when markets are unpredictable. A hedge is not a prediction — it’s protection. It offsets risks, stabilizes returns, and allows investors to focus on generating alpha without being
Pair trading — also known as spread trading or relative value investing — is one of the most elegant and disciplined strategies in alternative investing. Instead of betting on whether the market goes up or down, investors bet on the relationship between two assets. The classic example is FedEx vs. UPS — two
Short selling is one of the most misunderstood techniques in all of finance. It is frequently portrayed as risky, unethical, or mysterious — yet it is a foundational tool across alternative investments, including hedge funds, long–short equity strategies, market-neutral funds, and event-driven trading. Short selling isn’t inherently good or
Leverage is one of the most powerful — and dangerous — tools in alternative investing. It can transform a modest return into an exceptional one, unlock opportunities that would otherwise be inaccessible, and accelerate value creation. But it can also magnify losses, compress time horizons, and introduce risks that inexperienced investors often
Performance fees are one of the most defining characteristics of alternative investments. Whether it’s a hedge fund charging incentive fees, a private equity fund taking carried interest, or a private credit fund using profit-sharing structures, performance-based compensation is woven into the DNA of the industry. But performance fees are
Performance fees are a defining feature of hedge funds and many alternative investment vehicles. But left unchecked, performance fees could reward managers even after periods of poor performance. To prevent that, the industry uses a powerful mechanism called the high-water mark (HWM). A high-water mark ensures that managers only earn