Private alternative investments, or private alts, are investment opportunities that are not publicly traded and are typically available only to accredited or institutional investors. Private alts can offer investors the potential for higher returns, diversification, and access to specialized investment strategies. Because of this, private alts are becoming increasingly popular among investors.

The following are the primary categories of private alternatives:

• Private Equity (PE): This category includes investments in private companies that are not publicly traded. Private equity is a type of investment in which investors provide capital to private companies in exchange for equity ownership. Private equity firms typically seek to improve the performance of the companies in their portfolio through operational improvements or strategic acquisitions, with the goal of generating higher returns when the companies are eventually sold or taken public. Private equity funds typically invest in companies that are in their early stages of growth or are undergoing a significant change such as a management buyout (MBO). The broad category of PE also includes subcategories such as Venture Capital (VC) and Angel Investing.
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• Real Estate: Real estate investments include a wide range of opportunities, such as direct ownership of property, investments in real estate funds, or participation in real estate investment trusts (REITs). Real estate investments can offer investors the potential for steady income through rent payments, as well as the potential for capital appreciation as property values increase.
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• Infrastructure: Infrastructure investments involve funding the development of public works projects such as transportation systems, utilities, and energy production. Infrastructure investments can offer investors steady income through long-term contracts with government or private entities, as well as the potential for capital appreciation as the projects are completed and begin generating revenue. This category includes investments in physical assets such as power plants, airports, and highways. Infrastructure investments are generally considered to be less volatile than other private alternatives and can provide stable, long-term returns.
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• Hedge Funds: Hedge funds are investment vehicles that use a variety of strategies to generate returns, often through the use of leverage, derivatives, or short-selling. Hedge funds may invest in a wide range of asset classes, including equities, fixed income, commodities, and currencies. Due to their complex strategies and limited availability, hedge funds are typically only available to accredited or institutional investors.
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• Private Debt: Private debt investments involve lending money to private companies (i.e., companies that are not publicly traded) or individuals in exchange for interest payments and eventual repayment of the principal. Private debt investments can offer investors the potential for higher returns than traditional fixed income investments, but also come with higher risks due to the potential for defaults or credit downgrades. Private debt investments can provide stable, income-generating returns and are often used as a source of financing for private equity transactions.

Overall, private alts can offer investors the potential for higher returns and diversification, but also come with higher risks and limited liquidity. Each of these categories of private alts offers unique investment opportunities and has its own set of risks and benefits.  It is important for investors to carefully evaluate the risks and potential rewards of private alts, and to work with a financial advisor who can help identify appropriate investment opportunities based on their individual investment goals and risk tolerance.

Modern x Fiduciary: At Fire Capital Management, we combine the personalized service you deserve with a modern approach to investment management you can feel. Partnering with Fire Capital is tailored, transparent, and flexible. We will develop a custom plan across traditional and alternative asset classes in both the public and private markets to meet your unique needs.

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