Understanding Alternative Investment Funds
Ratin Biswass / 08 Jan 2026 / Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund
An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that
Can you provide a brief overview of AIFs? - Abhishek Patodiya [EasyDNNnews:PaidContentStart]
Editor Responds : An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that collects funds from sophisticated investors to invest in assets other than traditional equity, debt, or Mutual Funds. In India, AIFs are regulated by SEBI and are typically suited for high-net-worth individuals and institutional investors. They invest across diverse strategies such as private equity, venture capital, hedge funds, Real Estate, infrastructure, and distressed assets.
AIFs are classified into three categories. Category I includes funds that invest in startups, SMEs, social ventures, and infrastructure, which are considered economically desirable. Category II comprises private equity and Debt Funds that do not fall under Category I or III. Category III includes hedge funds that use complex trading strategies and leverage to generate returns. AIFs usually have a longer investment horizon, higher minimum investment requirements, and relatively higher risk, but they also offer the potential for superior returns and portfolio diversification.
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