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Understanding Alternative Investment Mutual Funds

March 12, 2012 | Comments: 0 | Views: 179

Alternative investment mutual funds are mutual funds that invest in assets aside from traditional investments, such as money market instruments, stocks, and bonds. These investment vehicles are available in a wide range, and are sometimes not available in a public securities market. For instance, one example of an alternative set of assets would be an investor's fine art collection. Currencies, commodities, derivatives and options are all traded in public markets. Purchasing an alternative investment mutual funds gives the investor the benefit of expert help, a diversified portfolio, and liquidity for those in need of exposure to asset alternatives. The following will go over three alternative investment mutual funds.

Direxion Dollar Bull 2X Fund

The Direxion Dollar Bull 2X Fund (DXDBX) is run by manager Paul Brigandi, and has been open to investors since June of 2008. This fund pits the value of America's dollar against other currencies listed in the foreign exchange market. The exchange rate is established from what the value of a currency is relative to others. Supply and demand dictate how these currency exchange rates change. In 2010, America's dollar lost value against several major currencies. The dollar's value is frequently compared against Japan's yen, Britain's pound, the Swiss franc, Sweden's krona, Canada's dollar, and the euro. Reports have stated that investors would have seen losses in the year 2010, explaining that an investment of $10,000 would have only been worth $9,711 at the end of the year.

American Century Gold Fund

The American Century Gold Fund (BGEIX) is managed by William Martin and Lynette Pang. According to The Wall Street Journal, the price of gold has gone up nearly 200% in recent years. Companies that actual own gold need deliveries made, storage options, and insurance. A mutual fund provides liquidity whenever you need it. The American Century Gold Fund offers diversification amongst these gold-dealing companies. According to Zacks Investment Research, the annualized five year return rate for the fund is more than 19%. With an expense ratio of 0.70%, compared to the average gold mutual fund expense ratio of 1.5%, American Century Gold Fund compares quite favorably to similar companies.

Fidelity Real Estate Income Fund

The Fidelity Real Estate Income Fund stands out because real estate isn't considered a real liquid asset. A real estate mutual fund invests its money in REITs, or real estate investment trusts, and property management companies, both of which are publicly traded. The fund is managed by Mark Snyderman, and it holds stocks, bonds, mortgage-backed securities from corporations, as well as convertibles. Their top holdings are listed as Acadia Realty Trust (AKR), MFA Financial, Inc. (MF), and Cypress Sharpridge Investments (CYS).

Connor Swinney is the owner of the What Are Mutual Funds website. He created the website to be used as a resource for people who are looking for more information on Who Are Mutual Funds For? or that would like to know how they can create a successful investment strategy.

Source: EzineArticles
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