Alternative Investments – Now Available to a Broader Investing Audience

The investing public now has a broader base of alternative investments and diversification strategies that were once the province of institutional and wealthy individuals. Why? Greater understanding of Reg D offerings and changes to Reg A through the JOBS Act make investing in alternatives more accessible than ever before. Alternative investments offered through JCC Capital Markets undergo a thorough due diligence discipline and are crafted to provide fair and transparent transactions to appropriate investors.

So, what exactly is an alternative investment? An alternative investment is defined as an investment that is not one of the three traditional asset types – stocks, bonds, and cash. Alternatives encompass a wide range of strategies including real estate, oil and gas, private debt and equity and variety of other investment choices.

Why use alternative investments? Alts provide potential for diversification of investment strategies away from the volatility of the stock market, and institutional models suggest that a portfolio of low or non-correlated assets has the potential to provide for attractive risk-adjusted returns. In fact, many universities including Yale and Harvard have crafted well diversified portfolios that include a significant allocation to alternative investments.

Reg D Offerings are private placements, which can provide a more cost-effective means for the issuer of raising capital than a public offering, it’s exclusively for high net worth investors, and often times have higher minimum investment requirements than a public offering.

Reg A offerings have a broader audience as they are not limited to high net worth investors, have a lower cost to the issuer than public offerings, and have more transparency than private placements.

Companies seeking capital find private placements and Reg A offerings can provide an efficient capital source.

As with all investments, there are risks. As stated above, alternative investments often have limited or no liquidity provisions for the life of the offering and investors must anticipate holding the investment for an extended period of time. Also, the transparency afforded by public programs is not required of private offerings. And because the minimum investment size is often higher, portfolio diversification may be more limited. Therefore, Reg D offerings are still limited to high net worth individuals.

Reg A offerings do provide public filings, but not with the frequency of public offerings and again, may have limited liquidity options.

Most financial advisors suggest limiting a client’s investment allocation to alternatives in light of these factors.

As a managing broker-dealer we are in the position to match strong potential companies for investment with investors seeking alternatives to create increased diversification within their overall portfolio. Through JCC Capital Markets LLC, alternative investments offered undergo a thorough due diligence discipline and are crafted to provide transparent transactions to appropriate investors.

JCC Capital Markets, LLC, specialize in mergers and acquisitions, managing broker-dealer, and alternative investments. For information about JCC Capital Markets, Inc. and alternative investments, call (626)432-7000.