Definition: The Alternative Investment Market is a unit of the London Stock Exchange (LSE) that offers alternative investments to accredited investors. It is the alternative investment equivalent of an exchange-traded fund (ETF), though it is smaller and less regulated.
The alternative investment market consists of equity funds, venture capital funds, corporate bonds, development loans, land purchases, and other forms of equity investment in private real estate markets. Funds that specialize in alternative investments tend to be concentrated in larger, more established companies that have been around for a long time, have established relationships with key stakeholders in their industry, and provide diversified investment opportunities within those industries.
The Alternative Investment Market is an investment opportunity that operates like a mature market, providing investors with exposure to stocks that may have a higher price than other stocks listed on the mainstream stock exchanges. However, unlike traditional stock investment, investors in the AIM can hold most of their investment in these companies. This means that the risk-reward profile is more skewed toward companies with higher potential returns and is less risky than others.
AIM invests in companies with high-risk situations but high-reward opportunities due to their lack of competition. It targets firms with an existing customer base and a history of good performance. Thus, it is privy to information that would otherwise be considered proprietary, which can help it spot underperformers before they deteriorate into full-blown failures.
Alternative investment market investors are typically less hands-on and more institutional. As a result, they tend to be better situated to gauge the health of an asset class through research and analytic tracking rather than rely upon memory or gut feeling. In addition, the majority of AIM deals involve long-term securities that don’t have a face-to-face interaction with the markets. These characteristics make alternative investment markets very safe places to put your money.
As the largest alternative investment marketplace in the world, AIM provides access to an international investor community with access to top-tier managers and funds while reducing the costs associated with cross-border equity investments. In addition, it is entirely free to use for both individual investors and institutions.
AIM helps bridge the gap allowing investors without access to traditional financial markets to participate in programs designed to generate passive income through the technology industry.