What is an alternative investment scheme?
Okay, it’s been a while, so I hope this isn’t being graded 🙂 An alternative investment scheme is most simply defined as an investment club or conglomerate of investors pooling their money in ‘alternative investments’ (those outside normal confines of stock, bonds, mutual funds, etc.) such as: financial derivatives (forwards, futures, swaps and options), commodities (sugar, coffee, gold, etc.), hedge strategies, venture capital (new business start ups), and even real estate. Typically, members are required to have high capital and astute knowledge of the markets so as to understand the risks involved and dough to back up investment consequences. Historically, the word ‘scheme’ was not used with a negative connotation but rather a description of group status (pooled resources). Depending on investments, and # of members, the scheme is most likely required to file with the SEC (if in the US).
