AIF
AIF stands for Alternative Investment Fund. It refers to a privately pooled investment vehicle in India that collects funds from investors (both domestic and foreign) and invests them as per a defined investment policy.
Mutual Funds & Fixed Income offerings are more popular with Retail Investors. However, High Net-Worth Investors are on constant lookout for specialized offerings that could generate high returns even if it means taking higher risks. For such Investors the options are PMS or AIF. While PMS services are focused only on the listed space, AIFs provide a wider bouquet of investment offerings.
An Alternative Investment Fund is an asset that is not one of the conventional investment types, such as stocks, bonds and cash. Most Alternative Investment assets are held by institutional investors or accredited, high-net-worth individuals because of the complex natures and limited regulations of the investments. Alternative Investments include pre-IPO deals, complex equity strategies, private equity, hedge funds, managed futures, real estate, commodities, derivatives contracts, etc.
Wealthy Investors can avail of such investment opportunities by investing through AIFs, which are not available normally. For example, a lot of pre-IPO deals happen via AIFs at attractive valuations.
Alternative Investments typically have a low correlation with those of standard asset classes, which makes them suitable for portfolio diversification. Due of this, many large Institutional Investors, ultra high net-worth individuals & family offices invest some portion of their portfolios in such offerings.
AIFs offer a chance for our Investors to go off the beaten track and Invest in securities that are unavailable to the common investor. While AIFs can also invest in listed equities, the structure allows for investments in securities which are unavailable under say a traditional mutual fund platform.