AIF
AIF
Alternative Investment Funds (AIF) pool money from sophisticated private investors. Funds collected are invested according to the investment policy of the AIF. Securities and Exchange Board of India’s mutual fund regulations doesn’t govern AIFs. However, AIF in India has its regulation.
What are the type of AIF
Category I AIF
Category I AIFs invest in start-ups or early-stage ventures or SMEs or social ventures or infrastructure or other sectors. The government or regulators consider these sectors as economically and socially desirable.
Category II AIF
SEBI defines Category II AIFs as the funds that do not fall under Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements. The Government of India doesn’t give any incentive or concession for investment in these funds.
Category III AIF
Category III AIFs apply diverse trading strategies and leverage by investing in listed and unlisted derivatives. They use arbitrage, derivatives trading, futures and margin trading strategies. Category III funds can be both close-ended and open-ended funds. They are less regulated than conventional investments. Hence they do not need to publish their information regularly. Also, the Government of India doesn’t give any incentive or concession for investment in these funds.