Liquid Alternative Investment

A liquid alternative investment refers to a type of investment that provides exposure to alternative asset classes or strategies, such as hedge funds or private equity, but with the liquidity and regulatory oversight of traditional mutual funds or exchange-traded funds (ETFs). These investments aim to offer portfolio diversification and hedge against market volatility while remaining relatively liquid and accessible to retail investors. They are typically more transparent and have lower fees than traditional hedge funds.

Example

A mutual fund that uses hedge fund strategies, such as long/short equity positions or arbitrage, but allows investors to redeem shares daily, is considered a liquid alternative investment.