Alternative Investments

Alternative Investments in short lessons: features and fee structures, performance and returns, private capital, real estate and infrastructure, natural resources, hedge funds and digital assets, each with worked examples, charts and exam traps.

How this topic is tested, its exam weight and study tips: Alternative Investments exam guide.

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Alternative Investments formula sheet

All 51 formulas of the topic, each explained. Every module page ends with its own formulas; the key formulas are here. Downloads come with a subscription or a pass; the free trial does not include them.

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  1. 01

    Alternative Investment Features, Methods, and Structures

    6 lessons · ~79 min2 videos 43 cards

    What makes an investment 'alternative', the three big categories (private capital, real assets and hedge funds), the three ways to get in (fund investing, co-investing and direct investing), and the ownership and pay structures (limited partnerships, side letters, management and performance fees, hurdles, catch-ups, high-water marks, clawbacks and waterfalls) that hold manager and investor together over many years.

  2. 02

    Alternative Investment Performance and Returns

    10 lessons · ~132 min4 videos 44 cards

    Why alternative investments are harder to appraise than listed stocks and bonds (life cycle, leverage, valuation and fees), how IRR and MOIC measure their returns, and how management fees, performance fees, hurdles, catch-ups, high-water marks, clawbacks and fund-of-funds layers turn a gross return into the net return a particular investor actually earns.

  3. 03

    Investments in Private Capital: Equity and Debt

    6 lessons · ~80 min2 videos 43 cards

    Private capital is money for companies raised outside public markets and banks: private equity (buyouts, venture capital, growth equity, PIPEs) and private debt (direct lending, venture debt, mezzanine, distressed, unitranche and specialty loans). This module explains how each works across the corporate life cycle, how private equity funds exit, what drives the risk and return of private equity and private debt, and what diversification benefit private capital adds to a portfolio of public stocks and bonds.

  4. 04

    Real Estate and Infrastructure

    8 lessons · ~104 min2 videos 45 cards

    Real estate and infrastructure as asset classes: what makes property unusual (heterogeneity, fragmented local markets, opaque prices, costly deals), the direct and indirect ways to own it including REITs, where its returns come from along the risk-return spectrum and how leverage and diversification work, then how infrastructure is defined, categorised by asset type and development stage, held directly or through funds and listed vehicles, and why investors value its stable, inflation-linked cash flows.

  5. 05

    Natural Resources

    6 lessons · ~79 min2 videos 45 cards

    Natural resources as an asset class: how raw land, farmland and timberland resemble and differ from real estate and from each other, how commodities are held (mostly through derivatives) and priced against the spot market through carry costs and convenience yield, and what drives their risk, return, inflation-hedging ability and diversification benefits in a portfolio of stocks and bonds.

  6. 06

    Hedge Funds

    9 lessons · ~122 min2 videos 45 cards

    What hedge funds are and how they differ from mutual funds, ETFs and private equity; the five strategy families (equity hedge, event driven, relative value, opportunistic and multi-manager); the direct and indirect ways to invest (limited partnerships, master-feeder funds, side letters, SMAs, funds of one, funds of funds and replication ETFs); and where hedge fund returns, risks and diversification benefits really come from, including the biases in hedge fund indexes.

  7. 07

    Introduction to Digital Assets

    7 lessons · ~94 min1 video 44 cards

    How distributed ledgers and blockchains work (consensus, proof of work versus proof of stake, permissioned versus permissionless networks, smart contracts and tokenization), the main kinds of digital assets, how they differ from traditional financial assets, the direct and indirect ways to invest in them, and what drives their return, risk and diversification value.