Classify by the return driver
A deal gets classified by its dominant return driver—what the capital buys—not the industry it happens to touch. A fund lending to apartment developers is private credit, not real estate: you own the loans, so interest drives your return. A fund buying oil wells is commodities, not energy stocks: you own the production.
Hybrids resolve the same way. Ask what the capital buys, and which engine that purchase feeds. The eight classes:
Real estate
Property. Returns come from rent collected while you hold and appreciation when the asset sells or refinances.
Infrastructure
Operating or development-stage real assets—power, data centers, transport. Long-lived contracts, long-lived cash flows.
Commodities
Owning resource production—oil and gas, mining, metals. You own the barrels and the ounces, not a trade on their price.
Private credit
The loans. You are the lender, and the return is the interest—income first, upside capped by design.
Private equity
Control of mature, cash-flowing companies—buyouts and roll-ups. The return is built by operating the business better, then selling it.
Venture
A minority stake in early, pre-profit companies. A growth bet: most positions return little, the winners return the fund.
Healthcare
Deals where the healthcare economics are the thesis—clinics, devices, facilities. Demographics do a lot of the work.
Public markets
Liquid, listed-securities strategies—hedge funds, equity income. The alternative part is the strategy, not the asset.
Cedar Court is real estate: the capital buys apartments, so rent and appreciation drive the return. If the same sponsor instead lent money to apartment buyers, that fund would be private credit—same industry, different thing bought, different class.
Stage: the risk dial
Within any class, the deal's stage sets the risk far more than the class does. A stabilized apartment building and a ground-up apartment development are the same asset class with completely different risk, income timing, and upside. A deal can span stages—buy stabilized, add value, build the next phase.
Stabilized
The asset already works—leased, producing, cash-flowing. Lower risk, income from day one, less room for a big markup.
Value-Add
The asset works but could work harder—renovate, re-lease, re-price. Some income now, a markup if the plan lands.
Development
The asset doesn't exist yet. No income for a while, the most that can go wrong, and the biggest multiple if it all goes right.
Cedar Court is stabilized—94% leased and cash-flowing on day one—with a value-add plan: renovate units as leases turn, raise rents, and sell the improved building. Income now, a markup later if the plan lands.
Strategy patterns you'll see everywhere
A handful of strategies repeat across classes. Buy-and-hold collects income from a working asset. Value-add buys underperformance, fixes it, and sells the improvement. Development creates the asset from scratch. Roll-ups buy many small operators and sell one big one. Lending strategies take the other side—steadier, capped, and paid first.
Strategy and stage together tell you what has to go right. The sharper question in any deal review isn't 'is this a good asset class?'—it's 'what exactly must this sponsor execute for the projected return to show up?'
Classify a deal by what the capital buys—that's the return driver, whatever the industry looks like on the surface.
Stage sets the risk more than the class does: stabilized pays now; development pays later, if it works.
The sharp question is never 'is this a good asset class?'—it's 'what must this sponsor execute for the return to show up?'
Reading it is half the job. Run the drills until the answers come without thinking.
Lost on a term? The glossary has every definition in one place.
Educational content only—not investment, legal, or tax advice. Every figure used in examples is hypothetical, including Cedar Court, which is a fictional deal.