An alternative investment or alternative investment fund (AIF) is an investment or fund that invests in asset classes other than stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals, art, wine, antiques, coins, or stamps and some financial assets such as real estate, commodities, private equity, distressed securities, hedge funds, carbon credits, venture capital, film production, financial derivatives, and cryptocurrencies. Investments in real estate, forestry and shipping are also often termed “alternative” despite the ancient use of such real assets to enhance and preserve wealth. In the last century, fancy color diamonds have emerged as an alternative investment class as well. Alternative investments are to be contrasted with traditional investments.
Sophisticated Investor. An investor who has had a gross annual income of $250,000 or more in each of the previous two years or has net assets of at least $2.5 million, as prescribed by the Corporations Regulations 2001 (reg 6D.2.03 and reg 7.1.28)
Can an SMSF be a sophisticated investor? In general an SMSF will be considered a “retail” client, however last year ASIC clarified that when an SMSF has net assets of $2.5 million or if the value of the investment is at least $500,000 then the SMSF can be considered a “wholesale” client.