An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that collects funds from investors to invest in non-traditional asset classes such as private equity, venture capital, hedge funds, real estate, and structured debt. AIFs are regulated by the Securities and Exchange Board of India (SEBI) and cater primarily to high-net-worth individuals (HNIs) and institutional investors.
AIFs are categorized into three types:
AIFs provide diversification and potential high returns but involve higher risks compared to traditional investment options like mutual funds and stocks.