While most alternative investments fall under the Dodd- Frank Wall Stress Reform and Consume Protection Act, they usually don’t have to register with the Securities and Exchange Commission (SEC). However, they are subject to examination by the SEC. Yet, they are not overseen or regulated the way mutual funds and ETFs are. Therefore, it’s imperative that investors do their due diligence when considering alternative investments.
Another consideration is that these investments have low correlation to stocks, bonds, mutual funds or other conventional investments. This means that these investments move counter to or in the opposite way of conventional securities. That feature makes them suitable for increasing your diversification within a portfolio. Tangible assets such as precious metals, oil or real estate also help the investor hedge against inflation.
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