Alternative Investment Funds
Access non-traditional asset classes and advanced strategies for portfolio diversification
What is an AIF?
Alternative Investment Funds (AIFs) are SEBI-regulated pooled investment vehicles that invest in non-traditional asset classes and advanced strategies beyond conventional equity and debt markets.
AIFs provide access to opportunities such as private equity, venture capital, structured credit, and long-short strategies, and are typically designed for sophisticated investors with a higher risk appetite and longer investment horizon.
Investment Highlights
- Non-traditional asset exposure
- SEBI regulated structure
- Minimum ₹1 crore investment
- Advanced strategy access
Categories of AIFs
SEBI classifies AIFs into three categories based on investment focus and strategy
Category I AIF
Invest in sectors considered socially or economically desirable, such as start-ups, venture capital, infrastructure, and SMEs.
These funds often support long-term capital formation and may have longer gestation periods.
Category II AIF
Include private equity funds, debt funds, and structured credit strategies.
These funds do not employ leverage except for day-to-day operational requirements and focus on generating returns through strategic investments.
Category III AIF
Use complex and dynamic strategies, including long-short equity, derivatives, and leverage.
These funds are more actively traded and may carry higher risk due to strategy complexity.
Liquidity vs Return Trade-Off
AIFs typically involve lower liquidity compared to traditional mutual funds, as investments are often locked in for a defined period.
This reduced liquidity allows fund managers to pursue higher-return opportunities that may not be accessible in liquid markets.
Important: Investors should carefully evaluate this trade-off, as higher return potential often comes with longer holding periods and increased risk.
Suitable for High Net-Worth Investors
AIFs are best suited for HNIs who meet the following criteria
₹1 Crore+
Ability to invest minimum required amount
Long-term Horizon
Patience for extended investment periods
Strategy Savvy
Understanding of complex strategies
Diversification
Seeking alternatives beyond traditional assets
Due to their complexity and risk profile, AIFs require a disciplined approach and informed decision-making.
Explore Alternative Investments
Book a consultation to understand which AIF category suits your investment profile.
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