Barriers to entry are both legal and structural.
Minimum investments are high, making it impossible for all but the most affluent to gain access.
In most cases, profits or losses are not realized for five to ten years, so these vehicles are only appropriate for those who do not need their money for that amount of time. Most alternative investments are structured as private limited partnerships. Partnerships are open to no more than 100 accredited investors, and those open to more affluent qualified purchasers can accept up to 500 investors. Investment managers overseeing alternative portfolios must believe that individuals from whom they accept money meet minimum investing requirements. Prospective clients are asked to fill out an exhaustive questionnaire outlining their financial holdings.