Alternative Investment Funds

An AIF is a privately pooled investment vehicle that collects funds from sophisticated investors and invests them according to a defined strategy under SEBI regulations.

• Governed by SEBI (Alternative Investment Funds) Regulations, 2012 — ensuring governance, transparency, and accountability.
• Set up as a trust, company, LLP, or body corporate — depending on the fund's structure and tax objectives.
• Unlike mutual funds, AIFs are not open to retail investors and require a minimum commitment of ₹1 crore per investor.

Each vehicle serves a different investor profile. AIFs stand apart in their access to private markets and specialised strategies.

• Mutual Funds – Retail-friendly, high liquidity, regulated by SEBI, focused on public markets.
• PMS – Personalised portfolios for HNIs (₹50 lakh minimum), direct ownership of securities, public markets focus.
• AIF – Pooled vehicle for accredited investors (₹1 crore minimum), access to private equity, venture capital, hedge funds, and other alternatives.

Before recommending any AIF, we perform structured due diligence across the fund, its manager, and its strategy.

• Manager Track Record – Past fund performance, team stability, and alignment of interests.
• Strategy & Mandate – Clarity of investment thesis, target sectors, and exit pathways.
• Fee Structure – Management fees, carry, hurdle rates, and expense ratios disclosed upfront.
• Governance & Compliance – SEBI registration, custodian, auditor, and reporting quality.

AIFs offer higher potential returns — but also come with risks that investors must be comfortable with.

• Illiquidity – Long lock-in periods (often 3–10 years) with limited exit options before maturity.
• Concentration Risk – Portfolios often hold fewer, larger positions compared to mutual funds.
• Manager Dependency – Performance is heavily tied to the skill and continuity of the fund manager.
• Market & Valuation Risk – Private valuations can be volatile and may lag public market movements.

AIFs mostly enjoy pass-through taxation — income is taxed directly in the hands of the investor, avoiding double taxation.

• Category I & II – Full pass-through status; income retains its original character (capital gains, interest, dividends) in the investor's hands.
• Category III – Pass-through applies for non-business income; business income is taxed at the fund level.
• TDS, advance tax, and reporting obligations should always be planned with a qualified tax advisor.

A structured, end-to-end process — from suitability assessment to ongoing fund monitoring.

• Suitability Assessment – Evaluate risk appetite, liquidity needs, and portfolio fit before recommending any AIF.
• Fund Shortlisting – Curate a shortlist of SEBI-registered AIFs across categories, matched to your mandate.
• Onboarding Support – Assistance with KYC, documentation, and smooth capital commitment.
• Ongoing Monitoring – Periodic reviews of fund performance, capital calls, and distributions.