What is Alternative Investment Funds and AIF Finance(AIF)?

An Alternative Investment Fund, or AIF or aif finance, 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.

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). With AIF & PMS Experts it's fully managed.

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