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ALTERNATIVE INVESTMENT FUND

Alternative Investments for Sophisticated Investors — Category I, II and III

AIFs provide access to private equity, venture capital, real estate funds, and hedge fund strategies. Designed for HNIs and family offices seeking alpha beyond traditional markets.

Min Rs.1 Crore
Investment Ticket
Cat I / II / III
Fund Categories
Higher Alpha
Potential
AIF Portfolio Overview
Fund CategoryCategory II
StrategyLong-short equity
Min InvestmentRs.1 Crore
Lock-in3 Years
Expected Return18–25% CAGR
KEY FEATURES

Why Consider AIF for Your Portfolio?

Access to Private Markets

AIFs allow investment in unlisted companies, private credit deals, and real estate development projects that are not accessible through public markets.

Higher Return Potential

Top-performing Cat II and Cat III AIFs have generated 18–25% returns — significantly above public market benchmarks — though with higher risk and illiquidity.

SEBI Regulated Structure

All AIFs are registered with SEBI under the AIF Regulations 2012. Quarterly investor reporting, independent custodian, and audited accounts are mandatory.

Dedicated Fund Manager

Unlike mutual funds, AIF fund managers run concentrated strategies with fewer holdings and higher conviction. You invest alongside institutional investors.

Diversification Across Categories

Category I includes VCFs and infrastructure funds. Category II covers PE and debt funds. Category III includes hedge funds and complex strategies. Each serves a different purpose in a portfolio.

Tax-Efficient for Category II

Category II AIF income is taxed at the investor level — pass-through taxation. This can be more efficient than corporate-level taxation in certain portfolio structures.

ELIGIBILITY

Who Should Invest in AIFs?

AIFs are suitable for sophisticated investors with significant investable surplus and a long investment horizon.

  • Net worth above Rs.5 Crores (investable assets)
  • Investment horizon of 3–7 years minimum
  • Tolerance for illiquidity — early exit is restricted or penalised
  • Understanding of alternative asset class risks
  • Prior experience with equity or debt markets recommended
  • High-income professionals, business owners, and family offices

Documents Required

  • PAN Card
  • Aadhaar Card
  • Net worth certificate from CA (some funds)
  • Bank account proof (cancelled cheque)
  • KYC including FATCA / FEMA declarations
  • Subscription agreement and placement memorandum sign-off
THE PROCESS

How It Works

1
Investor Onboarding and KYC

Complete SEBI-mandated KYC, FATCA declaration, and AML process. This is done once and covers all AIF investments going forward.

2
Review Fund Documents

We share the placement memorandum and investment strategy document for your review. Our advisor explains the fund structure, fee model, and risk factors in plain language.

3
Subscription and Fund Transfer

Sign the subscription agreement and transfer the minimum investment amount to the fund's designated escrow account. RTGS / NEFT transfer — no cash.

4
Portfolio Updates and Exits

Receive quarterly portfolio statements, NAV updates, and capital call notices if applicable. Exit happens at the end of the fund tenure or through secondary market if available.

Frequently Asked Questions

What is the minimum investment in an AIF?
SEBI mandates a minimum investment of Rs.1 Crore per investor per AIF. Some Cat III funds have a higher minimum of Rs.5 Crores. This regulatory floor ensures that only sophisticated investors with adequate financial resources participate.
Are AIFs liquid — can I exit before the fund tenure?
Most AIFs are illiquid for the lock-in period (typically 3–5 years). Some Cat III funds listed on stock exchanges offer limited liquidity through secondary market trades. Private secondary sales are possible in some cases but at a discount. Plan for a full-tenure holding when investing.
How are AIFs taxed in India?
Category I and II AIFs have pass-through taxation — income is deemed to arise in the hands of investors in the same proportion as their holding. The tax nature (capital gains, business income, dividend) depends on the fund's underlying transactions. Category III AIFs pay tax at the fund level. Consult your tax advisor for personals implications.
What is the difference between a PMS and an AIF?
PMS manages a portfolio of listed securities for individual clients with a minimum of Rs.50 lakhs. An AIF pools capital from multiple investors with a minimum of Rs.1 Crore per investor and can invest in unlisted securities, real estate, and other alternative assets. AIFs are less liquid but offer access to a broader universe.
Can NRIs invest in Indian AIFs?
NRIs can invest in Category I and Category II AIFs through the NRI route subject to FEMA compliance and the specific fund's investment guidelines. Some funds restrict NRI participation due to FEMA complexity. Category III AIFs with leverage may have additional restrictions. We clarify fund-specific rules before you invest.

Explore Alternative Investments Beyond Public Markets

AIF advisory for HNI and family offices. Access top-tier fund managers through our institutional network.