Jim Eccleston: Caution Urged As Alternative Investments Becoming Mainstream
From the Desk of Jim Eccleston at Eccleston Law Offices:
Alternative investments are gaining traction with investors who are looking for high returns in a low interest-rate market. Seasoned fund managers may not even be familiar with these highly alternative assets. They go beyond non-listed REITs. The new alternatives include business development companies, direct consumer and business loans, timber and farmland. Subprime direct lending also is becoming a popular investment option. An example is that borrowers who have small blemishes on their credit report can apply for car loans funded and securitized by those new alternative investments.
Clearly, the rise in popularity of alternative fund assets calls for a broader understanding of how they work. It is also important to understand the risks associated with all of the aforementioned assets. Although seemingly varying, all of those assets bear high risks, high costs, long-term commitments and illiquidity. Most portfolios keep their alternative holdings under 5% for good reason. Investors should approach alternative assets with caution.
The attorneys of Eccleston Law represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.
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