Alternative assets: A glossary guide to types, benefits & how to invest

Types of alternative assets

There’s no single official list of all types of alternative assets, but most investors will run into the following common categories.

Real estate

Real estate is one of the oldest alternative asset classes. You can invest by buying property directly (a rental home, commercial building, or land), or indirectly through structures like:

• Real Estate Investment Trusts (REITs)
  
  
• Non-traded REITs
  
  
• Real estate crowdfunding platforms
  
  

Real estate is often used for income (rent) and potential long‑term appreciation. It can also behave differently from public stocks, which is helpful when you’re thinking about diversification. (CAIS Group)

Private equity & venture capital

Private equity (PE) and venture capital (VC) involve investing in companies that are not publicly traded. Learn how investing in private companies works in practice, including how accredited investors can access high-growth opportunities beyond public markets.

• Private equity often buys mature companies, improves them, and eventually sells or takes them public.
  
  
• Venture capital backs earlier-stage, high‑growth startups.
  
  

These investments usually have long time horizons, limited liquidity, and higher risk, but they also offer the potential for outsized returns if the businesses succeed (SEC). Augment helps create access to such companies for accredited investors through the Collective and marketplace. 

Hedge funds

Hedge funds are professionally managed pooled investments that can use a wide range of strategies. For example:

• Long/short equity
  
  
• Global macro
  
  
• Event-driven or merger arbitrage
  
  
• Market‑neutral strategies
  
  

They often use leverage, derivatives, and short selling to pursue returns that are not tightly tied to the broader stock market. Because of their complexity and risk profile, hedge funds are usually available only to accredited or institutional investors and typically charge higher fees than traditional funds. (FINRA)

Commodities

Commodities are physical goods like:

• Precious metals (gold, silver)
  
  
• Energy (oil, natural gas)
  
  
• Agriculture (corn, wheat, coffee)
  
  

Investors can get exposure through futures, ETFs, or commodity‑oriented funds. Commodities are often used as an inflation hedge or a way to reduce reliance on stock and bond performance, though they can be volatile and heavily driven by macro events and supply‑demand shocks. (CAIS Group)

Collectibles & tangible assets

Collectibles are physical items with perceived value beyond their basic use, including:

• Fine art and photography
  
  
• Wine and whiskey
  
  
• Watches and jewelry
  
  
• Classic cars and luxury goods
  
  

These assets can be highly subjective, illiquid, and tough to value. Returns may depend on taste trends, rarity, and the health of ultra‑wealthy buyer markets. Fractional platforms and funds are making these types of alternative assets more accessible by allowing investors to purchase small slices rather than entire assets.

Cryptocurrencies & digital assets

Cryptocurrencies and other digital assets are the newest entrants to the alternative assets universe. 

This category includes:

• Cryptocurrencies like Bitcoin and Ethereum
  
  
• Stablecoins
  
  
• NFTs (non‑fungible tokens)
  
  
• Tokenized funds or securities representing fractional ownership in real‑world assets
  
  

Digital assets can be highly volatile and subject to fast‑changing regulations. At the same time, tokenization and blockchain rails are reshaping how ownership is recorded, traded, and settled, potentially making investing in alternative assets faster and more accessible over time. (US Congress)

Why investors choose alternative assets

Investors are often looking for specific portfolio benefits:

• Diversification: Many alternative assets have lower correlation to public stocks and bonds. That means that when public markets swing, alternatives may move in different directions. (CAIS Group)
  
  
• Potential for higher returns: Some alternatives, like venture capital or private equity, target higher growth in exchange for higher risk and illiquidity.
  
  
• Inflation and volatility hedges: Real assets such as real estate and commodities can sometimes hold value better during inflationary periods or market stress. (CAIS Group)
  
  
• Access to unique opportunities: Alternatives can provide exposure to strategies and markets that simply don’t exist in a standard 60/40 stock‑bond portfolio.
  
  

Used thoughtfully, alternative assets can enhance a well‑built core portfolio rather than replace it.

Risks and challenges of alternative assets

Before investing in alternative assets, it’s important to understand the trade‑offs.

• Illiquidity and longer time horizons: Many alternative investments lock up capital for years. Private funds may only allow redemptions at set intervals, and some structures limit your ability to sell at all. (FINRA)
  
  
• Limited transparency and valuation complexity: Compared with public stocks, alternatives often provide fewer disclosures. Pricing may rely on models or appraisals rather than real‑time market quotes, making it harder to know the “true” value at any given moment. (FINRA)
  
  
• Regulatory considerations: U.S. regulators, such as the SEC and FINRA, closely monitor complex and alternative investments, especially when sold to retail investors, retirement savers, or older clients. Recent guidance emphasizes clear disclosures, suitability, and careful due diligence. (FINRA)
  
  
• Higher fees and minimums: Many structures, such as hedge funds, private equity funds, and non‑traded REITs, come with higher costs and sometimes steep minimum investments, which can meaningfully reduce net returns. (FINRA)
  
  

Bottom line: investing in alternative assets can be powerful, but it’s not a free lunch. You’re trading liquidity and simplicity for potential return and diversification.

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Traditional assets still form the core of most portfolios. Alternative assets can sit around that core, adjusting risk, return, or diversification depending on your goals and tolerance.

How to invest in alternative assets

There’s no single “right” way to start investing in alternative assets. Most investors choose from a mix of the following approaches.

Direct ownership vs. fund-Based Investing

• Direct ownership: Buying a rental property, a stake in a private business, or a piece of art. You gain control and a clear link to the asset, but you also assume concentration risk, maintenance headaches, and potential illiquidity.
  
  
• Fund‑based exposure: Investing in REITs, interval funds, private credit funds, venture funds, or professionally managed alternative mutual funds. These can offer diversification and professional management, but you’ll pay management fees and may still face lockups or trading limits. (SEC)
  
  

Using fintech and fractional platforms

Fintech platforms like Augment have made investing in alternative assets more accessible by lowering minimums and handling the heavy operational lifting. Learn what to evaluate and how to find the best pre-IPO investment platform, including fees, liquidity terms, and regulatory structure. Examples include platforms focused on:

• Real estate portfolios
  
  
• Private credit or litigation finance
  
  
• Art, collectibles, or music royalties
  
  

Many also offer fractional ownership, letting you buy small slices of large, traditionally “off‑limits” assets. Always review fees, liquidity terms, and regulatory status before diving in.

At Augment, our vision is to make private-market investments accessible. Check out live deal flow via our Collective, the top companies in the private market in The Power 20 rankings, and get timely updates on the private markets via The Pulse.

Know your risk tolerance and diversification plan

Even if you’re excited about alternative asset classes, it’s wise to:

• Keep your core emergency fund in cash‑like instruments
  
  
• Maintain diversified exposure to broad stock and bond markets
  
  
• Limit any single alternative position or strategy to a sensible slice of your overall portfolio
  
  

A diversified mix of traditional and alternative assets is usually more resilient than an extreme bet in either direction. (SEC) 

Trends shaping the future of alternative assets

The alternative assets landscape is evolving quickly. A few big themes to watch:

• ESG and impact‑focused alternatives: Investors increasingly seek private credit, infrastructure, and real assets aligned with environmental, social, and governance (ESG) goals, not just returns. (Elliot Davis)
  
  
• Tokenization and blockchain-based management: Regulators and market participants are paying more attention to tokenized funds, securities, and real‑world assets recorded on blockchains. This could make investing in alternative assets faster and more efficient—but it also demands strong investor protections. (NY Fed)
  
  
• Democratization of access: Lower minimums, interval funds, and fintech platforms are bringing alternative investments into 401(k)s, IRAs, and everyday brokerage accounts. Regulators continue to scrutinize these developments to ensure products and recommendations are appropriate for retail investors. (SEC)

For investors, the takeaway is simple: alternatives are no longer a niche reserved only for institutions, but that doesn’t make them automatically “simple” or “safe.”

Final thoughts

Alternative assets can play a powerful supporting role in a modern portfolio. They can offer diversification, new sources of return, and exposure to parts of the economy that don’t show up in a standard index fund.

At the same time, investing in alternative assets means accepting trade‑offs around liquidity, complexity, fees, and risk. A thoughtful approach anchored in your goals, time horizon, and risk tolerance is essential.

If you’re curious about building a portfolio beyond the public markets – explore the tools, education, and opportunities across the Augment Blog, Collective, Manual, Pulse, and The Power 20 as you continue learning.