Alternate Investment Funds (AIFs)

What are Alternative Investment Funds (AIFs)?

Alternative Investment Funds (AIFs) are a separate category of investments and differ from traditional mutual fund investments. AIFs are used by investors for purposes of diversification, have potentially higher returns with limited risks, or to access asset classes that are not regularly available through traditional investments.

AIFs include a variety of assets and strategies, including private equity, hedge funds, real estate, venture capital, and more. AIFs are used to gain exposure to asset classes that are not readily available in conventional investment options.

Why should you consider AIFs?

1. Potential for Higher Returns
2. Diversification Beyond Stocks and Bonds
3. Risk Reduction Through Asset Class Diversification
4. Access to Unconventional Growth Sectors
5. Expert Management and Risk Mitigation Strategies

Types of AIF

SEBI has classified AIFs into 3 categories.

Category I AIF

This group of AIFs directs investments towards startups, early-stage ventures, social initiatives, small and medium-sized enterprises (SMEs), as well as sectors identified as socially or economically beneficial.

• Venture Capital Funds (Including Angel Funds)
• SME Funds
• Social Venture Funds
• Infrastructure Funds

Category II AIF

These are funds which do not fall under Category I or Category III and cannot use leverage or borrow.

• Private Equity Funds
• Debt Funds
• Fund of Funds

Category III AIF

These AIFs employ intricate trading strategies and may use leverage or debt for investments in listed or unlisted derivatives.

• Private Investment in Public Equity Fund (PIPE)
• Hedge Funds

Who Should Consider Investing in AIF?

If you're a small or new investor, it's best to begin your investment journey with mutual funds. However, if you have a substantial portfolio and investing experience, you should think about allocating some investment in AIFs.

These asset classes help you diversify your portfolio further. The minimum investment required in AIF is Rs 1 Crore.

How to Invest?

There are over 1300 SEBI registered AIFs, each with multiple strategies and plans, making the choice difficult. At Goalstox, we can help you select the right scheme to fit your goals, portfolio, and risk profile.