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WHAT IS ALTERNATIVE INVESTING?

Alternative (or "Alt") investing is two things

One: It’s an investment that is not traditional. In other words, it is not a stock or bond.

Two: It’s also an investment strategy that is not traditional. The best example of a traditional strategy is a “long-only” strategy – buying and holding a stock or bond.

These two aspects – alternative investments and alternative strategies  – can be combined with traditional investments and strategies or used in isolation. For example, a long/short credit fund uses an alternative strategy (long/short) with traditional investments (bonds).  Or, a mortgage fund uses a traditional strategy (long only) with an alternative investment (mortgages).

Combined with traditional investments, alternative investments can strengthen your portfolio and grow your wealth.    

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Why isn't alternative investing more prevalent in Canada?

Until recently, alternative investing has been difficult to access for individuals. That said, every Canadian has alternative exposure through the largest retirement portfolio in Canada – the Canadian Pension Plan. 

 

The portfolio is managed by one of the world's most savvy investment organizations, the CPP Investment Board. On March 31, 2021, 61% of the CPP was invested in alternatives and 14% in credit.  

How can I access alternative investing?

Canadian securities law has created two types of investors: “Accredited Investors” and  everyone else.  Both types can access alternatives through funds.

To be an “Accredited Investor” you must pass a financial qualification test or give your advisor investment discretion. YTM Capital Credit Opportunities Fund is a private fund available to Accredited Investors.

At the start of 2019 alternative investing became available to all investors for the first time through funds called "Liquid Alts" – liquid because they can be bought and sold more easily than private funds. Liquid Alts provide all investors with access to alternatives, with the protection of more comprehensive oversight. YTM Capital Fixed Income Alternative Fund is a Liquid Alt.