Alternative investing is a catch-all term for investments which fall outside of conventional asset classes. Here we provide an overview of alternative investing, covering common alternative investments as well as key market characteristics and performance trends. We begin with a quick look at conventional assets so we can see how alternatives differ and conclude with a helpful framework for understanding the real estate asset class.
Conventional assets are typically traded via public markets, which makes them relatively easy to buy and sell as highly liquid investments. In most cases, conventional assets come under the purview of one or more regulatory bodies, such as the Securities and Exchange Commission (SEC).
Examples include publicly traded stocks and bonds as well as cash and cash equivalents. These traditional assets make up the bulk of most investors’ portfolios. Conventional assets can be “packaged” into various investment products, for example, mutual funds or exchange traded funds (ETFs).
Examples of conventional assets include:
- A mutual fund tracking the S&P 500 Index
- An ETF offering exposure to the US investment grade bond market
- Publicly traded stocks and bonds issued by companies like Alphabet, Boeing, and Unilever
- US Treasury securities
Alternative Assets
In contrast, alternative assets are generally private investments, meaning they don’t trade on public exchanges. As such, alternative investments are typically less liquid and harder to quickly sell for cash than conventional assets. In many cases, alternative investments are only available to institutional or accredited investors. Alternative assets can also be more complex, less transparent, less regulated, and riskier than conventional assets.
Taken together, these characteristics may translate to greater potential returns—and underscore the need for investors to complete thorough due diligence before committing any capital to alternative investments. Other possible benefits of alternative investments include greater diversification and lower volatility.
Visit the Advisor Resource Hub for an article discussing these benefits.
Common Alternative Investments
- Real assets – Investments in tangible assets, such as real estate, commodities, precious metals, infrastructure, agricultural land, natural resources, and collectibles.
- Private equity – Investments in private companies; strategies include leveraged buyouts, venture capital, and growth capital.
- Private debt – Debt held or financed by private, non-bank lenders; strategies include direct lending, distressed debt, real estate debt, or special situations.
- Hedge funds – A wide range of strategies with relatively liquid assets, such as equity long/short, relative value, distressed, and merger arbitrage.
Alternative investments are also “packaged” into different investment structures, such as limited partnerships and various types of private funds.
Alternatives market size, growth, and historical returns
The size of the alternatives industry is poised to increase 2.5 times by 2028, according to Preqin data cited by KKR. Currently, more than $15 trillion of alternative assets are estimated to be under management. KKR calls attention an interesting fact: While $15 trillion may sound large in absolute size, it is less than 11% of total global GDP and only 2.4% of total financial assets.1
In terms of historical returns, selection within the alternatives universe has proven to be vital. According to data compiled by J.P. Morgan Asset Management, over the 10-year period from 2014 to 2023, venture capital, private equity, transport, and infrastructure led the way in terms of returns. A balanced exposure to alternatives is illustrated by “Asset Allocation” and would have generated an annualized return of 9.6%.2
A closer look at real estate as an alternative investment
Valued at more than $300 trillion, real estate is one of the world’s largest asset classes. The real estate investment universe is vast, offering investors a wide variety of vehicles and products. Let’s break it down into four primary dimensions that can help frame your thinking.
Public vs. Private
Publicly traded real estate securities are listed on an exchange and offer daily liquidity and pricing. They’re open to any investor with a brokerage account and have low minimum investment amounts.
Private real estate investments are not traded on public exchanges. Private investments are typically open only to accredited investors and can have substantial minimum investment amounts.
Public real estate investments are generally more liquid and accessible than private real estate investments. While this liquidity can help individual investors enter and exit positions more easily, it also creates the potential for more volatility, often driven by moves in the broader stock market.
To offer their securities to the public, issuers must adhere to formal registration, listing, and reporting requirements. Private investments and funds are typically structured so that they are exempt from many reporting requirements.
For investors who can accept the relatively lower liquidity profile and have an appropriately long investment horizon, private real estate can offer several benefits, such as the potential for lower volatility, greater diversification, and lower correlation to other asset classes. Furthermore, some market participants believe private markets offer investment managers more opportunities to generate attractive risk-adjusted returns.
Active vs. Passive
This categorization speaks to your role as an investor. If you’re an active investor in a real estate project, then you have hands-on responsibilities. It’s up to you to find, finance, and manage the property. You’re responsible for handling tenants, toilets, trash, and taxes.
If you choose to delegate certain responsibilities to a third party, such as a property management firm, your role will still be relatively active, as you’ll be on the hook for vetting and supervising the service provider.
Passive investors take a hands-off approach to the day-to-day operations of a real estate investment. This tactic requires less time and expertise from the individual investor. The heavy lifting is handled by a fund manager or sponsor, who ideally has extensive skill and experience in the field.
Active investments allow you to have more control over the real estate investment, which can translate to greater returns if you’re successful, but also greater downside if you run into trouble. Regardless of the outcome, active investors can expect to expend considerably more time and effort than passive investors. Passive real estate investments typically allow you to take less risk and, because they’re less time-intensive, allow you to tap into a wider range of investment opportunities.
Debt vs. Equity
You can sort the real estate investment universe into debt and equity instruments, a familiar concept within the context of corporations. Take Ford, for example—you could invest in the company’s debt by buying its corporate bonds or invest in its equity by becoming a shareholder.
The same framework applies in the real estate universe. Real estate debt investment returns are driven by cash flow streams generated by interest payments on loans backed by real estate assets. Equity investments are a “claim” on a real estate asset’s income and value. Compared to debt investments, equity real estate investments have the potential for higher risk and higher return.
Single Asset vs. Diversified
A real estate investment could offer exposure to one particular asset, or multiple assets. The designation impacts the investment’s risk-return profile. An investment in a single asset represents a concentrated bet on a specific property, whereas a multi-asset investment can deliver the benefits of diversification, including reduced risk and volatility.
Single asset real estate investments are often accessible through syndication deals, where investors pool their capital to purchase a single asset then share in the profits. Most real estate funds are multi-asset investments, offering exposure to various real estate properties.
Other Noteworthy Categories
You’ll also see real estate investments grouped according to other criteria, such as:
- Strategy type – e.g., core, core plus, value add, opportunistic, development
- Geographic location – e.g., Southwest, Sun Belt, urban core; Tier I, II, III
- Asset type – e.g., multifamily, industrial, office, hotel, mixed use
Lastly, you might categorize real estate investments according to their “wrappers,” or the different ways underlying real estate exposures can be packaged into investment vehicles, such as REITs, ETFs, or limited partnerships.
Caliber’s Advisor Resource Hub
To learn more about alternative investing and real estate, visit our Advisor Resource Hub or contact our team today.
About Caliber (CaliberCos Inc.) (NASDAQ: CWD)
Caliber (Nasdaq: CWD) is a diversified alternative asset manager with over $2.9 billion in Managed Assets. For more than 16 years, Caliber has delivered value across market cycles with its private equity real estate investment platform, specializing in hospitality, multi-family residential, and industrial real estate. In 2025, Caliber launched a Digital Asset Treasury strategy anchored in Chainlink (LINK). This initiative bridges real and digital asset investing, offering investors access through both publicly traded equity (Nasdaq: CWD) and Caliber’s private equity real estate funds.
Investor Considerations
The information contained herein is general in nature and is not intended, and should not be construed, as accounting, financial, investment, legal, or tax advice, or opinion, in each instance provided by Caliber or any of its affiliates, agents, or representatives. The reader is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances, desires, needs, and requires consideration of all applicable facts and circumstances. The reader understands and acknowledges that, prior to taking any action relating to this material, the reader (i) has been encouraged to rely upon the advice of the reader’s accounting, financial, investment, legal, and tax advisers with respect to the accounting, financial, investment, legal, tax, and other considerations relating to this material, (ii) is not relying upon Caliber or any of its affiliates, agents, employees, managers, members, or representatives for accounting, financial, investment, legal, tax, or business advice, and (iii) has sought independent accounting, financial, investment, legal, tax, and business advice relating to this material. Caliber, and each of its affiliates, agents, employees, managers, members, and representatives assumes no obligation to inform the reader of any change in the law or other factors that could affect the information contained herein.
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