Alternative Investments Overview

Risk inherent to the overall market, which cannot be mitigated through diversification.

Risk associated with trading aspects, like liquidity and leverage, rather than market forces.

Risk of not being able to quickly sell an asset at a fair price.

Risk of loss amplified by using borrowed money to increase potential gains.

Investment strategy based on a fund manager's forecast of market direction (e.g., rising interest rates).

The risk of loss from a merger not being completed as expected.

The risk that a borrower won't pay back debt.

The risk that a trading partner won't honor their agreement.

Risk of getting a worse price due to delays in an order being filled.

Funds that invest in mergers/acquisitions.

The risk associated with potential system failures, faulty settlement procedures, inaccurate reporting, and errors in accounting within alternative investment funds.

Hedge funds are lightly regulated investment funds with flexible investment strategies, allowing for short positions, leverage, derivatives, arbitrage, and diverse investment opportunities.

Hedge funds differ from traditional mutual funds primarily due to their regulatory structure, allowing for more aggressive investment strategies, including shorting, leverage, and arbitrage.

Hedge funds don't have a single legal structure; they can be organized as trusts or limited partnerships, among other forms, with investment objectives and investor suitability varying based on the manager's strategy.

Hedge fund managers are crucial in selecting superior investments within their chosen strategies and relevant markets, making their ability to identify opportunities crucial for success.

Allows selling securities without a prospectus to qualified investors, bypassing public disclosure requirements.

Allows selling securities without a prospectus to non-individual investors who invest a minimum amount (usually $150,000 in Canada).

Allows selling securities without a prospectus to individuals or institutions meeting specific financial criteria.

Only investors meeting specific qualifications (like accredited investors or minimum investment exemption) can access hedge funds.

Entities like pension funds, trust companies, and corporations with significant net assets (usually over $5 million).