Abstract
The second chapter is a logical continuation of the first one. Its purpose is to present the concept of alternative investments as contemporary innovations in the securities market. This chapter shows the various, often differing concepts of alternative investments appearing in the world literature. They formed the basis for defining the conditions that must be met in order for a specific type of investment to be included in a particular category. Moreover, this section discusses the characteristics of alternative investments that distinguish them from traditional forms of investment, which include the pursuit of absolute returns as well as active management of managers mostly investing their own funds in these investments. In addition, diverse investment strategies were characterized along with their essence in pursuit of the so-called absolute profit. At the same time attention was paid to the possibilities offered by alternative investments in portfolio diversification and the use of methods of arbitrage. It also presents the mechanism of a two-tier remuneration system for managers which is used in the management of hedge funds, which are a very important category of alternative investments. This chapter also highlights the specificity of regulation of the alternative investment sector.
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Notes
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Research on complex portfolio diversification opportunities for traditional instruments by using alternative investments was led by: Schneeweis et al. (1998).
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Sokołowska, E. (2014). Alternative Investments as Modern Financial Innovations. In: Alternative Investments in Wealth Management. Springer, Cham. https://doi.org/10.1007/978-3-319-08075-8_2
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