Alternative Investment Fund

Invest in a bouquet of handpicked assets via a privately pooled investment. AIFs follow an exclusive investment approach keeping in mind your exclusive wealth accretion objectives. With AIFs, you can invest in venture capital, hedge funds, private equity and private investment in public equity, to name a few.

Why Invest in Alternative Investment Funds ?

Structured To Suit Specific Needs

AIFs are high ticket investments that can be structured using a mix of asset classes and instruments like listed equity, bonds, private equity, etc., to build a product that addresses very specific requirements.

Potential Higher Returns

When pitted against various other investment options, Alternative Investment Funds offer the chance of earning higher returns. The magnitude of pooled amount allows managers to prepare flexible strategies for optimising returns.

Diversification

AIFs invest money in various assets, across different categories. Through diversification, AIFs can reduce asset-specific risks.

Types of Alternative Investment Funds

AIF has been broadly divided into three categories, per the Securities and Exchange Board of India (SEBI):

Category I AIF

This type of AIF allows you to invest in SMEs, start-ups, and other financially viable corporations that show high potential for growth. This category includes funds like Venture Capital Funds, Infrastructure Funds, Angel Funds, and Social Venture Funds. Category I AIFs are close-ended funds.

Category II AIF

Category II AIFs funds do not use leverage for any reason except to cover operational needs that are not covered under the other two categories. These include Debt Funds, Fund of Funds, Private Equity Funds and funds for distressed assets. These are also close-ended funds.

Category III AIF

These comprise complex trading techniques and listed or unlisted derivatives. Private Investment in a Public Equity (PIPE) Fund and Hedge Funds are available under this category. Category III AIFs can be close-ended or open-ended.

FAQs

Investors need to invest a minimum of INR 1 crore in AIFs. Investors who are directors or employees of the AIF-offering company can start AIF investments with a minimum of INR 25 lakh.

Mutual Funds must adhere to SEBI regulations, including the SEBI (Mutual Funds) Regulations, 1996 and SEBI (Collective Investment Schemes) Regulations, 1999. Alternative Funds are not covered under these regulations. The minimum investment for AIFs is INR 1 crore, making them suitable for sophisticated investors, whereas Mutual Fund investments can start as low as INR 500.

Indian Residents, Non-Resident Indians (NRIs), and foreign nationals are eligible to invest in AIFs.

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