How do alternative funds differ from traditional investments?

First of all, by type of assets. Traditional funds (UCITS) mainly invest in listed stocks and bonds and liquid instruments. Alternative investment funds invest in alternative assets: real estate, private equity, credit, infrastructure, commodities, complex derivatives, private structures, etc. Regulation and investor protection. Open-end investment funds have very strict rules on diversification, liquidity, and transparency (for example, concentration limits per issuer, daily or frequent redemption requirements).

• Alternative investment funds have a specific regulatory framework through AIFMD, focused mainly on the manager (AIFM) and risk management, allowing more flexibility in the fund's structure and strategy, but also more understanding responsibilities for the investor. Liquidity.
• Traditional funds generally allow frequent redemptions (daily/weekly). Alternative investment funds may have rare redemption windows or fixed lock-up periods, being designed for much longer horizons. Level of complexity. Alternative investment funds more frequently use leverage, derivatives, and sophisticated legal/contractual structures. Their analysis requires knowledge of details (offering documents, partnership agreement, valuation policy, liquidity policy, etc.).

The targeted type of investor. Many alternative investment funds are primarily intended for professional or qualified investors, precisely because the risks and complexity are higher. The AIFMD regulation and national legislation clearly separate the treatment of retail investors from that of professional investors.