What is AIF?
Alternative Investment Funds are an investment avenue to pool in funds for investing in private equity, real estate or to hedge funds. AIFs may be established or incorporated as a company, trust or other bodies corporate (including limited liability partnerships).
Categories of AIF
- Category I – AIF that invest in start-ups or social venture funds, infrastructure funds, SME funds, and so on. They are often considered socially viable or economically desirable for the government or regulators.
- Category II – Funds that do not leverage or undertake to borrow other than to meet the operational requirement which does not fall under Categories I and III. Typically Private Equity Funds fall in this category.
- Category III – Funds that undertake diverse or complex trading strategies including investment in listed or unlisted derivatives. Typically Hedge Funds fall in this category. Only close-ended funds are in Category I and II AIFs while open-ended funds are in Category III.
Benefits of AIF
- Customisable – Structure of AIF can be designed for a particular investment strategy either in terms of exposure in a specific sector or investment in diverse asset classes.
- Flexibility to raise resources – AIF may raise money from any investor whether Indian, foreign, or of Non-Resident Indian (NRI)
- Have a Large Corpus – Since AIF work like mutual funds, by pooling capital, a larger corpus is pooled together. The accumulated corpus is useful in achieving set investment objectives.
Fundtech Edge is one of the known Distribution House in India having tie-ups with leading AIF in the country.