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What is Alternative Investment Funds (AIF)?

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An Alternative Investment Fund, or AIF, is a confidentially pooled investment vehicle developed or incorporated in India that collects assets from expert investors, whether Indian or global, for investing in line with a defined investment policy for the welfare of its investors. AIFs can be formed or incorporated as a corporation, trust, or other legal entity (including limited liability partnerships). The SEBI (Mutual Funds) Laws of 1996, the SEBI (Collective Investment Schemes) Laws of 1999, or any other Board regulations governing fund management do not apply to AIF.

AIFPMS 10

Categories of AIF

Category I

AIFs that invest in start-ups or social enterprise funds, infrastructure funds, SME funds, and so on are classified as Category I AIF. For the government or regulators, they are frequently deemed socially or economically viable.

Category II

Funds that do not use leverage or borrow for any reason other than to cover operational needs that do not fall under Categories I or III. This is where Private Equity Funds usually fall.

Category III

Funds that engage in a variety of or complex trading techniques, such as investing in listed or unlisted derivatives, fall into Category III. Hedge funds are typically included in this category. Open-ended funds are classified as Category III AIFs whereas closed-ended funds are classified as Category I and II AIFs.

Benefits of AIF

Customizable

The structure of an AIF can be tailored to fit a specific investing strategy, whether it's exposure to a single sector or diversification across asset classes.

Raising Resources Flexibility

The AIF may raise funds from any investor, whether Indian, foreign, or non-resident Indian (NRI)

Have a Large Corpus

Because AIFs act like mutual funds, they pool capital to create a larger corpus.
The collected capital might be used to meet certain investment goals

FAQ

What are AIF funds?

Any fund established or incorporated in India that is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investment in accordance with a defined investment policy for the benefit of its investors is referred to as an Alternative Investment Fund (AIF).

Who can invest in alternative investment funds?

Investors that desire to diversify might pick Alternative Investment Funds to invest. All Indians, including NRIs, PIOs, and OCIs, are eligible to invest in AIFs. They must, however, fulfill the qualifying requirements, which include a minimum capital of Rs20 crore for each programme and Rs10 crore for Angel Funds. Each investor shall make a minimum investment of Rs1 crore or Rs25 lakh (in the case of AIF employees, directors, and fund managers).

How can I invest in AIF in India?

If you are a risk-taking investor who wants to diversify his or her risk, you may invest in SEBI-registered Alternative Investment Funds as well as join us and we will assist you through the whole process

Can alternative investment funds (AIF) give loans?

Alternative Investment Fund is a privately pooled investment vehicle in which the funds supplied by investors are not used to make loans.

What is not included in Alternative Investment Fund?

An alternative investment is a financial asset that does not fall into one of the conventional (stocks, bonds, and cash) investment categories.

What is the difference between mutual fund and alternative investment fund?

A mutual fund is a pooled investment entity, with numerous participants raising cash. Mutual investments include stock, bonds and financial-market instruments, whereas alternative investment funds (AIF) are distinct from traditional standard investments such as stocks, debt securities, etc. Investments in a wide range of assets.

Are alternative investments high risk?

They are also more volatile than traditional assets, like equities, bonds and reciprocal funds. Most of them are relatively not liquid and therefore hard to sell fast. Most are complicated and frequently involve risks that are larger than typical investments.

Are alternative investments liquid?

Aside from standard stocks and bonds, the phrase “alternative investment” refers to a wide range of assets. Many are not publicly priced or traded, making them difficult to trade. That is why they are said to as lliquid.

What are 4 types of investments?

4 distinct types of investment are split into two sub-categories, which are:

  1. Growth investments: Long-term investments in shares or property.
  2. Defensive investments: Consistently generated income such as cash and bonds.

What is the minimum investment in AIF?

Angel funds require a minimum investment of INR 25 lakhs per investor. If the AIF is not an angel fund, the minimum amount of investment per investor is INR 1 crore.

What does Alternative Investment Funds stand for?

Any fund established or incorporated in India that is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of its investors is referred to as an Alternative Investment Fund (AIF).

What is the enrolment charge to be paid by an Alternative Investment Fund?

The registration fee is set by SEBI Regulations and must be paid by the applicant. The following is the AIF registration fee schedule

  • The registration fee for Category I Alternative Investment Fund is Rs. 5, 00,000.
  • The registration fee for the Category II Alternative Investment Fund is Rs. 10, 00,000.
  • The registration fee for Category III Alternative Investment Fund is Rs. 15, 00,000.

Some of the best performing Alternative Funds

  • Abakkus Asset Manager
  • Roha Asset Managers
  • Girik Advisors
  • Incred Capital
  • Ampersand Capital
  • Accuracap Tech
  • Carnelian Asset Management
  • Alchemy Capital
  • Sundram AIF