Alternative Investment Funds (AIF) — Curated for Sophisticated Investors

An AIF is a privately pooled investment vehicle that collects funds from investors for investing in accordance with a defined strategy. SEBI classifies AIFs into Category I, II, and III based on the mandate and risk profile.

Regulations generally prescribe a minimum of ₹1 Crore for most investors. Certain exemptions or thresholds may apply for employees or accredited investors as per prevailing SEBI rules.

Category I typically backs early-stage ventures, infrastructure, social ventures, etc. Category II includes private equity, debt, and funds not covered in I or III. Category III includes hedge-fund-like strategies such as long-short, derivatives, or complex trading.

Experienced investors, HNIs/Ultra-HNIs, family offices and NRIs seeking diversification beyond traditional assets and comfortable with higher risk/complexity may consider AIFs after suitability assessment.

AIFs can involve strategy, liquidity and market risks. Some strategies may use leverage or derivatives. Past performance is not indicative of future results; evaluate the fund document set and risk factors carefully.

Many AIFs have a fixed tenure or defined redemption windows. Category III may offer relatively more liquidity than closed-ended Category I/II funds, but terms vary by scheme.

Yes. AIFs must be registered with SEBI and follow regulations on eligibility, disclosures, valuations, and periodic reporting.

Tax treatment depends on the AIF Category and the nature of income. Some income may be taxed at fund level and others pass-through to investors. Please consult your tax advisor for your specific situation.

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