Alternative investments are any investments that are not in publicly traded stocks and bonds. The majority of mutual funds and exchange-traded funds (ETFs) invest in publicly traded stocks and bonds. Alternative investments have gained popularity as a means to diversify portfolios with non-correlated assets, thereby reducing risk and volatility. Examples of Alternative investments include:

1. Commodities
2. Real Estate
3. Cryptocurrencies
4. Private loans
5. Private equities (typically through private equity funds)
6. Royalty streams on music, mining, or pharmaceuticals (typically through hedge funds)

Alternatives are not right for all investors, as the downsides include:

1. High fees, which can be 2-10% plus a share of the upside
2. Nonexistent or limited regulatory oversight
3. Limited liquidity, including lockup periods and gates on exit, can make portfolio rebalancing a challenge.

Smarter Bear recommends that investors considering alternative investments seek expert advice from someone without a financial stake in the transaction before investing.