D.35 Alternative investments and liquidity risk Flashcards

Non-traditional assets such as private equity, hedge funds, real estate, commodities, and collectibles, typically offering diversification benefits.

The risk that an investment cannot be easily sold or converted into cash without a significant loss in value.

Investments in private companies through venture capital, buyouts, or direct investments, often requiring long-term capital commitment.

A pooled investment vehicle using complex strategies, including leverage and derivatives, to seek high returns with varying liquidity constraints.

A company that owns, operates, or finances income-producing real estate, offering investors exposure to real estate markets with some liquidity.

Physical assets like gold, oil, or agricultural products that serve as investment options, often used as a hedge against inflation but with liquidity constraints.

Tangible assets such as art, rare coins, and antiques, which can appreciate in value but may be illiquid and difficult to value.

A restriction in hedge funds and private equity that prevents investors from redeeming their investment for a specified period.

A market where investors can buy or sell stakes in private equity funds before the fund’s maturity, often at a discount due to liquidity constraints.

The process by which committed capital is called by a private equity fund over time as investments are made, impacting liquidity planning for investors.