What is AIF?
An AIF is like a curated travel expedition. Instead of each traveller planning their own trip with limited options, a group pools resources and engages expert planners to design specialised routes—covering unique destinations and experiences that are not usually available in standard travel packages.
This analogy reflects:
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Pooling of funds/resources → group of travellers.
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Expert management → travel planners.
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Exclusive opportunities → specialised destinations/experiences.
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Defined strategy/policy → curated itinerary
The Right Fit for AIF
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High Networth Individuals
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High Risk Appetite
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Institutional Investors
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Innovation based
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Minimum investment requirement: In India, SEBI mandates a minimum of ₹1 crore for AIF investments, ensuring participation from experienced and financially capable investors.
Curated AIF selections
Venture Capital Fund
These funds invest in early-stage or emerging businesses with high growth potential, offering investors exposure to innovative startups before they scale.
Real Estate Fund
Focused on residential, commercial, or infrastructure projects, these funds allow investors to participate in real estate development without directly owning property.
Angel Fund
A category of venture capital, angel funds pool money from investors to back promising startups at a very early stage, often before traditional funding sources are available.
Private Credit Fund
These funds lend to businesses or projects outside the conventional banking system, providing investors with fixed-income opportunities and borrowers with flexible financing.
Private Equity Fund
Private equity funds acquire stakes in established companies, aiming to improve operations, scale growth, and eventually exit with substantial returns.
The AIF Edge
Portfolio Diversification
AIFs allow investors to access multiple asset classes beyond traditional equity and debt, spreading risk across sectors and instruments, thereby improving portfolio resilience against market fluctuations.
Expert Management
Funds are managed by seasoned professionals with deep sector expertise and research-driven strategies, ensuring informed decisions that maximise return potential while carefully managing associated risks.
Access to Unique Opportunities
Investors gain entry to startups, private equity, real estate, private credit, and hedge strategies—exclusive opportunities typically unavailable in conventional mutual fund or retail investment options.
Customised Risk-Return Profiles
Different AIF categories (I, II, III) enable investors to select strategies aligned with personal goals, whether conservative income generation, balanced growth, or aggressive high-return opportunities.
Potential for Superior Returns
Through active management, early-stage investments, and alternative strategies, AIFs offer the possibility of higher returns compared to traditional instruments, especially for investors with a higher risk appetite.
Regulated Structure
AIFs operate under SEBI’s regulatory framework, providing transparency, accountability, and investor safeguards while ensuring compliance with stringent reporting and governance standards.
Alignment with Investor Goals
By offering varied investment avenues, AIFs can be structured to match long-term wealth creation, steady income generation, or short-term tactical strategies in line with investor objectives.
Insights & Clarifications
What are AIF funds?
Alternative Investment Funds (AIFs) are privately pooled investment vehicles that collect capital from investors and invest in specialised assets such as private equity, venture capital, real estate, private credit, or hedge strategies.
Who can invest in AIF?
All Indian residents, Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) are eligible to invest in AIFs, subject to prescribed eligibility criteria. Each AIF scheme can raise a maximum corpus of ₹20 crore or more, depending on its category. The minimum investment required is ₹1 crore per investor, while employees, directors, or fund managers of the AIF may invest with a reduced minimum of ₹25 lakh.
How can I invest in AIF?
You can invest in AIFs through SEBI-registered fund managers or intermediaries. The process involves completing the KYC, signing agreements, and committing the minimum investment amount required by the fund.
Are AIFs high risk?
Yes, AIFs generally carry higher risk compared to traditional investments like mutual funds or fixed deposits. The level of risk depends on the fund category, underlying assets, and chosen investment strategy.
Are AIFs liquid?
No, AIFs are not highly liquid. They typically have lock-in periods and fixed tenures, which means your investment is tied up until the fund matures or provides specific exit opportunities.
What is the minimum investment in AIF?
As per SEBI regulations, the minimum investment in an AIF is ₹1 crore per investor. For employees, directors, or fund managers of the AIF, the minimum amount is ₹25 lakhs.
What is the enrollment charge to be paid by an AIF?
At the time of registration, an AIF must pay a one-time application fee of ₹1 lakh and a registration fee of ₹5 lakhs (for Category I & II) or ₹10 lakhs (for Category III) to SEBI.