As the name suggests, Alternative Investment Funds (AIFs) provide a different path from traditional investment options like direct equity, mutual funds, and bonds for High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) who are seeking unique investment opportunities for higher returns. AIFs are a sophisticated type of pooled investment vehicle that attracts institutional and high-net-worth investors, requiring a minimum investment of Rs.1 crore. These funds are governed by the SEBI (Alternative Investment Funds) Regulations of 2012 and are typically structured as corporations, Limited Liability Partnerships (LLPs), trusts, and other entities. AIFs offer the operational convenience of mutual funds combined with the flexibility of Portfolio Management Services (PMS), employing defined investment strategies to achieve superior returns. AIFs usually focus on alternative asset classes such as venture capital, private equity, hedge funds, and infrastructure funds, with clearly defined investment objectives. They are categorized into three types—Category I, II, and III—based on the types of investment opportunities they are permitted to pursue.
