All About Alternative Investment Funds
04 Apr 2024
All About Alternative Investment Funds
Alternative Investment Fund or AIF is a a privately pooled investment vehicle that invests in alternative asset classes such as private equity, commodities, venture capital, hedge funds, real estate, commodities, and derivatives.
Minimum Requirements/Eligibility
Indian residents, NRIs, are eligible to invest in AIFs.
Min investment amount is Rs 1 crore for investors.
Types of AIFs in India
AIFs can be further divided into three categories, such as:
Category I AIF: This category invests in start-ups, early-stage ventures, social ventures, SMEs, or infrastructure or other sectors.
Category II AIF: These AIFs are those who do not fall under categories I and III such as real estate funds, private equity funds (PE funds), funds for distressed assets, etc.
Category III AIF: These AIFs use varied trading strategies in their investment and can employ leverage including investment through listed or unlisted derivatives.
Why invest in AIFs?
Portfolio Diversification: AIFs enable diversification beyond traditional investments like real estate, private equities, hedge funds, commodities amongst others.
Flexibility: Since they invest in a wide range of assets, they tend to have greater flexibility in their investment strategies.
Low Volatility: Category III AIFs include long short funds which can employ derivative strategies allowing them to manage risk actively.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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