FOR MANY YEARS, hedge funds were the status symbol of the investment world, promising superior returns to the lucky few who could afford the price of admission. But more often than not, the superior returns haven’t materialized—and lately hedge funds have lost some of their luster.
These lightly regulated investment funds use a broader array of strategies than the typical mutual fund. For instance, a hedge fund might try to boost returns by borrowing money and then using that money to purchase additional investments.

REAL ESTATE investment trusts come in two basic flavors. Mortgage REITs earn interest by providing financing to real estate owners and operators. Equity REITs purchase and operate properties such as apartment buildings, shopping centers, warehouses and office buildings. They collect rent and other income, which is then passed along to shareholders, and also occasionally make money by selling properties at a profit. Equity REITs account for the vast majority of REIT assets.
Investors’ appetite for REITs is heavily driven by interest rates,

BITCOIN EXPLODED IN popularity in 2017, skyrocketing from less than $1,000 in January to more than $19,000 in December, before ending the year just above $14,000. It’s been a rollercoaster ride ever since, as charts of bitcoin’s price performance make all too clear.
Still, bitcoin has proven far more stable and durable than other digital currencies. Indeed, the number of failed cryptocurrencies is in the thousands, a warning sign for prospective buyers.
Bitcoin may be intended as a new currency,

MANY ALTERNATIVE investments can be slotted into one of two categories: They are either hard-asset plays, like commodities and real estate, or they are financially engineered to perform unlike conventional stocks and bonds, which is what you get with many hedge funds and hedge-fund-like mutual funds.
Among hard assets, the classic investment is gold, which is widely seen as a hedge against inflation and political turmoil, and viewed as a good diversifier for financial assets like stocks and bonds.

WHAT COUNTS AS AN alternative investment? Opinions differ. But the list might include gold, silver, stocks of mining companies that focus on these two metals, hedge funds, mutual funds that endeavor to act like hedge funds, timber, farmland, private equity funds that buy privately held companies, residential and commercial rental properties, real estate investment trusts, commodity funds that buy everything from agriculture to energy futures contracts, stocks of energy and natural-resource companies, venture capital funds that invest in startup companies,

THE FEDERAL DEPOSIT Insurance Corporation provides protection for bank accounts, including checking accounts, saving accounts, money-market deposit accounts and certificates of deposit. In the event of a bank failure, you’re insured for up to $250,000 per insured bank, with the insurance applying to each ownership category. Among the ownership categories are accounts solely in your name, accounts held jointly with someone else and bank products held in an IRA.
Suppose you have $250,000 in a savings account in your name and your spouse has a similar sum.

CASH INVESTMENTS include things like Treasury bills, savings accounts, money-market deposit accounts, money-market mutual funds and certificates of deposit, where there’s little chance you will lose money and which can typically be sold at short notice (though, in the case of CDs, there will usually be an early withdrawal penalty).
Historically, cash investments like Treasury bills and money-market mutual funds have paid a yield that roughly approximates the inflation rate. That means you’ll likely find your money is losing purchasing power once the taxman gets his share.

IN SEARCH OF EXTRA income, investors sometimes skip bonds—and instead sell call options against their stock portfolio or buy funds that use this strategy. The buyers of these call options get the right to call away the underlying stock at a specified “strike” price either when the option expires or at any time up until the option’s expiration date. In return for that right, the buyers pay a premium to the sellers.
Selling call options has two key drawbacks.

EXCHANGE-TRADED index funds have soared in popularity since the first U.S. fund was launched in 1993. But ETFs weren’t the first investment funds to be listed on the stock market. That distinction belongs to closed-end funds, which have traded in the U.S. since 1893.
Every closed-end fund has two prices. There’s the price of the publicly traded shares—and then there’s the value of the fund’s assets expressed on a per-share basis, otherwise known as its net asset value.

EMERGING MARKET bonds have posted impressive returns in recent decades, as developing economies have grown more robust. That, in turn, has bolstered the credit quality of emerging market debt, resulting in a narrowing of the spread between the yield on emerging market debt and that available on U.S. Treasury bonds.
From here, however, returns may be be more muted. The historical tightening of the spread between emerging market debt and Treasury bonds was a onetime gain.

YOU SHOULD THINK of international bond funds not as a standalone investment, but as a further way to diversify a portfolio.
An international bond fund can potentially post gains either because foreign interest rates decline, pushing up the price of existing bonds, or because the dollar declines in value. Many international bond funds don’t hedge their currency exposure. But some funds do hedge, either occasionally or all the time. This will make the funds less volatile,

AS INVESTORS HAVE sought both higher yields and protection against rising interest rates, some have turned to floating rate funds, also known as bank-loan or leveraged-loan funds. Examples include ETFs such as Invesco Senior Loan ETF and SPDR Blackstone Senior Loan ETF, and mutual funds like Fidelity Floating Rate High Income Fund. There are also closed-end funds that focus on bank loans, many of which use leverage to goose their yield.
The loans held by these funds have their rates pegged to short-term interest rates.

HIGH-YIELD JUNK BONDS can offer impressive interest payments. The question is, how big a price will you pay in defaults? Junk bonds receive a rating of Ba1 or lower from Moody’s Investors Service, or BB+ or lower from Fitch Ratings and Standard & Poor’s. That means these bonds are considered below “investment grade”—and there’s a serious risk you won’t get your money back. Historically, some 5% of junk bonds have defaulted each year, though defaults in recent years have been running at more like 2% or 3%.

PREFERRED SHARES have a devoted following among a segment of investors, who are attracted by the relatively generous yields, often 5% and above. Despite their name, preferred shares are more like bonds than regular (or “common”) stock. Forget price appreciation. Over the long haul, almost all of your return will likely come from a preferred’s regular dividend payments.
Preferred shares might climb in price if interest rates decline. But unlike common stock, preferred shares don’t benefit from rising corporate earnings.

WHEN YOU BUY BOTH corporate and Treasury bonds, you take interest-rate risk, meaning your bonds could fall in price if interest rates rise. But corporate-bond investors take an additional risk that government bondholders don’t have to worry about: There’s a chance the companies involved could default on their interest payments.
In addition, corporate bonds are often callable before maturity, meaning an issuer can pay off its bonds early. This can be bad news for investors,