Page 225 - A Canuck's Guide to Financial Literacy 2020

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▪ Hedge Funds

Hedge funds are alternative investments that pool investors’ dollars and invest
them into various financial instruments. Hedge funds try to generate positive
return, regardless of market direction by taking advantage of arbitrage
opportunities, using long and short strategies and utilizing options, to name a
few.

▪ Asset-Backed Securities

Asset backed securities are complex investments that are backed by an
underlying financial asset. These financial assets are a group of illiquid assets
which are unable to be sold individually. Common asset backed securities
include credit card loans, mortgage, loans, auto loans, home equity loans, etc.

▪ Real Estate
Investors can invest in real estate which is a broad market. This can range from
buying a property to more complex such as Real Estate Limited Partnership
Units. (RLPU).
▪ Real Estate Partnership Units – RLPU is when a group of investors buy real
estate for the purpose of generating a cash flow and long-term appreciation.
Interested investors would participate in the project and be rewarded if the
project or investment is successful, either on the back-end or on the disposition
of the asset.
▪ Real Estate Investments Trusts – REITS are also a popular investment product.
REITS allow investors to participate in the distribution of rental income of the
underlying properties. They trade similar to stocks and can either be public or
private. Private REITs are available only to accredited investors mentioned
above.

▪ Private Placements

Private placement is when a company raises money through a non-public
offering. They’re typically offered to a small number of investors which includes
friends, family, accredited investors and institutional investors. Private
placements are attractive to wealthy and knowledgeable investors as they
typically allow for the purchase of stock at discounted prices while offering
warrants to purchase additional stock in the future.

▪ Venture Capital

Venture capital is a form of private equity financing that is provided to early
stage, start up and emerging companies who are believed to have the potential
for growth.

▪ Commodities
Investors can invest in commodities through futures contracts or exchange
traded funds. Commodities include agricultural products such as corn, wheat,
soybeans, pork bellies, etc. Precious metals such as gold and silver are
commodities as well. Trading commodities involves taking a position whether