An Alternative Investment Fund (AIF), is a confidentially pooled investment vehicle developed or incorporated in India that collects assets from expert investors, whether Indian or global, for investing in line with a defined investment policy for the welfare of its investors. AIFs can be formed or incorporated as a corporation, trust, or other legal entity (including limited liability partnerships). The SEBI (Mutual Funds) Laws of 1996, the SEBI (Collective Investment Schemes) Laws of 1999, or any other Board regulations governing fund management do not apply to AIF.
Benefits of AIF
Know about the tax benefits
Alternative investments offer tax advantages, like pass-through depreciation and capital gains treatment.
Look at the Direct Ownership
Public investments provide paper assets while ownership of physical assets, like real estate or art, offers direct ownership.
Uncorrelated with Stock Market
Investing requires effort and a steep learning curve, discouraging some investors from pursuing opportunities.
Identify Passive Investments
Diversifying with alternative investments can protect against stock market volatility and loss.
Types of AIF
Angel Funds pool money from multiple investors for early-stage firm investment, providing added expertise for growth.
Venture Capital Fund
Venture Capital Funds provide funding to high-growth start-ups for development and expansion, with each investor receiving a proportional share.
Infrastructure Funds invest in public assets, offering potential capital growth and dividend income to investors.
Social Venture Fund
SVF invests in socially conscious firms generating profits while addressing social and environmental issues.
Private Equity Fund
PE funds invest in private firms, minimizing the investor's risk with a diverse portfolio of shares. The usual investment horizon is 4 to 7 years, with an expected profitable exit.