Alternate Investment Funds (AIF)

Alternative Investment Funds (AIFs) are investment vehicles that pool money from sophisticated investors to invest in non-traditional assets. These assets can include private equity, venture capital, real estate, hedge funds, and other alternative investments that are not typically available through traditional investment options like mutual funds (MFs).

Key Characteristics of AIFs

• Regulation : AIFs are regulated by the Securities and Exchange Board of India (SEBI) but do not fall under the same regulations as mutual funds.
• Investor Profile : AIFs primarily target high-net-worth individuals (HNIs) and institutional investors, requiring a minimum investment of ₹1 crore.
• Investment Strategy : AIFs often employ unique investment strategies aimed at generating higher returns, which can involve higher risks compared to traditional investments.


• Categories : AIFs are classified into three categories :
• Category I : Invests in startups, SMEs, and infrastructure, often with government incentives.
• Category II : Includes private equity and debt funds, investing without borrowing.
• Category III : Engages in complex trading strategies, including hedge funds.