For investors that don't quite meet the accreditation standard, there are other compelling institutional quality investments, commonly referred to as Alternative Investments or Alts.  The management and operation of many alternatives in the United States are subject to certain federal regulations including:

• The Investment Company Act of 1940 (the “1940 Act”)

• The Securities Act of 1933 (the “Securities Act”)

• The Securities and Exchange Act of 1934 (the “Exchange Act”)

• The Investment Advisers Act of 1940 (the “Advisers Act”). 

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In addition to federal regulations in the United States, Alternative Investment Funds may be subject to state securities laws (also known as “blue sky” laws) in any state in which a participating investor is based.  In addition, depending on the fund structure, a filing may be required to be made with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) under the Corporate Transparency Act.

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These investments are largely comprised of Commercial Real Estate, Real Estate Loans, Corporate Credit, Senior Secured Loans, and other debt;

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Alternative Investment Structures​

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Business Development Companies (BDCs) - Closed-end structures used to raise capital to be deployed as loans to public or private U.S. firms with market values of less than $250 million. Typically, these are small emerging firms or distressed companies emerging from financial difficulties. BDCs must distribute 90% of their income to shareholders to avoid corporate income taxes. There are both listed and unlisted versions of BDCs.

 

Non-Traded REITs - A Real Estate Investment Trust (REIT) is a type of alternative investment that allows investors to earn income from real estate without directly owning or managing properties.  By law, REITs must pay out at least 90% of their taxable income to shareholders. 

 

Interval Funds - Semi-illiquid, closed-end alternative funds that are offered to investors directly . They are priced daily at net asset value. Investors are given a periodic opportunity to sell shares directly back to the fund at NAV at specified intervals (e.g., monthly, quarterly).

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