Alternate Investment Funds
- AIF can be set up as a trust or a company or a limited liability partnership or a body corporate.
Key Features:
- AIFs are SEBI regulated product offerings
- AIFs come under purview of regulator. SEBI introduced revised AIF regulations in 2012 to protect investors interests.
- Investment Goal of AIF is the same as PMS or MF
- To create wealth for investors, AIF can offer diversification and potential for higher returns compared to traditional investments.
- They can also provides investment oppurtunities that are not available to other investment instruments.
- Private Offering
- AIF is not offered by all AMCs and cannot be bought publically. It is offered by limited distributors.
- An Investment Vehicle structure similar to MFs
- AIF working is similar to MFs where stocks are held in pool account, units are allocated to investors and increase in NAV leads to wealth creation.
- AIF differs from MFs as it invests in non traditional asset classes which can include private equity, venture capital, hedge funds and real estate.
Categories of AIFs as per their investment themes:
- Category I
- Venture Capital funds
- SME funds
- Social Venture funds
- Infrastructure funds
- Category II
- Private Equity funds
- Debt funds
- Other funds not classified under the other two categories (Residual)
- Category III
- Long only funds
- Long short funds