What is an Alternative Investment Fund (AIF)?

Alternative Investment Funds (AIFs) are privately pooled investment vehicles that invest in assets beyond traditional stocks and bonds—such as private equity, venture capital, hedge funds, and infrastructure. Regulated by SEBI under the AIF Regulations, 2012, these funds cater primarily to high-net-worth individuals and institutions due to higher minimum investment requirements.

Types of AIFs

• Venture Capital Funds (VCFs): Invest in early-stage startups with high growth potential.
• Infrastructure Funds: Focus on large public projects like roads and airports, offering stable returns.
• Angel Funds: Pool capital from individuals to invest in young businesses, often with strategic support.
• Social Venture Funds (SVFs): Back businesses with social or environmental impact goals.
• Private Equity Funds (PE): Invest in unlisted companies for long-term growth and value creation.

Benefits of AIFs

• Diversification: Low correlation with traditional markets, reducing overall risk.
• Direct Ownership: Exposure to tangible assets like real estate or private businesses.
• Tax Efficiency: Enjoy tax benefits through pass-through structures and depreciation.
• Passive Investing: Professionally managed, requiring minimal investor involvement.