2019, the global breakdown of financial assets included a 13% allocation to alternative investments. Characteristics Alternative investments are sometimes used as a way of reducing overall investment risk through diversification. Some of the characteristics of alternative investments may include: Low correlation with traditional financial investments such as stocks and bonds It may be difficult to determine the current market value of the asset Alternative investments may be relatively illiquid (see "liquid alts") Costs of purchase and sale may be relatively high There may be limited historical risk and return data A high degree of investment analysis may be required before buying Liquid alternatives Liquid alternatives ("alts") are alternative investments that provide daily liquidity. Liquid alternative investments should produce returns uncorrelated to GDP growth, must have protection against systemic market risk and should be too small to create new systemic risks for the market. Hedge funds may be included in this category; however, traditional hedge funds may have liquidity limitations, and the term is usually used for registered mutual funds which use hedge fund strategies such as long-short equity investments. United States Liquid alternatives became popular in the late 2000s, growing from $124 billion in assets under management 2010 to $310 billion in 2014. However, in 2015 only $85 million was added, with 31 closed funds and a high-profile underperformance by the largest long-short equity fund at the time, Marketfield Fund. In 2014 there were an estimated 298 liquid alternative funds with strategies such as long-short equity funds; event-driven, relative value, tactical trading (including managed futures), and multi-strategy. This number does not include option income funds, tactical shorting and leveraged indexed funds. There has been expressed skepticism over the complexity of liquid alts and the lack of able portfolio managers. One of the world's largest hedge fund managers, AQR Capital, began offering funds in 2009, and grew from $33 billion in assets under management (AUM) in 2010 to $185 billion in AUM in 2017 driven in part by marketing mutual-fund like products with lower fees. As of 2016, AQR Capital was the largest manager of liquid alts. See also Art valuation Chartered Alternative Investment Analyst Diamonds as an investment Gold as an investment Inflation hedge Investment wine Palladium as an investment Philatelic investment Platinum as an investment Silver as an investment Traditional investments References Further reading External links Portfolio Diversification benefits of Investing in Stamps by Chris Veld, University of Stirling.