First of all, we need to understand what Alternative Investments are.
An alternative investment is a financial asset class that does NOT fall into "conventional investment categories".
Conventional categories are basically investments into stocks, bonds, and/or cash.
Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts.
Real estate is also often classified as an alternative investment.
What do alternative investment fund managers do? They manage wealthy peoples' assets that do not fall into conventional categories as managing these asset classes can be very time consuming - rich people are always looking for ways to save time.
Good alternative investment managers generally help in these few ways:
- Information and updates - They keep you updated on the market conditions of each asset class, and help you make better decisions on what to do next.
- Effective management of assets - they help you move assets around to more profitable areas.
There are many kinds of alternative investment managers, and these ultimately depend on what wealthy individuals require. Often times there are several managers taking care of 1-2 asset classes each.
Alternative investment managers are generally compensated via a percentage % on returns (also known as 'carry'), OR a monthly retainer fee.
