Every one of us wants to Invest money but the question that disturbs us all is, where? When you will search the market, you will get a number of investment options.

Then, what we can do?

We have researched and after consulting with our experts we have come up with one of the best ways to invest money in and that is Alternative Investment.

 Different from stocks, cash, and bonds, the Alternative Investment is the one which includes investment in Tangible assets like wine or other valuable metals. Also, there is also an option to invest in distressed securities, hedge funds, private equity, all of them are financial assets.


?What Is An Alternative Investment Funds

You may be familiar with the Conventional Investments Avenues which includes debt securities, stocks, or other such things but the Alternative Investments is totally different from it.

We would like to tell you that that AIF is a vehicle that invests in assets and strategies and which can’t be classified into the category of stocks, cash or bonds.

To go beyond the traditional method of investing, it is the investment in strategies or we can say combination of strategies. In simple words, AIF is a kind of investment fund that invests in managed futures, hedge funds, Private Equity, venture capital, etc.

For your knowledge, we would like to tell you that the Securities and Exchange Board Of India i.e SEBI explained the Alternative Investment Fund under Regulation 2(1)(b) of the 2012 regulation act.

Not everyone can invest in AIF because it requires high investment funds unlike mutual funds but the possibilities to get high revenue through it is more than any other investments.

The AIF can be established in any form from LLP(Limited Liability Partnership) to a trust, a company or let’s say a corporate body.


A short video clip (2:31) that explains how Private equity works?

?What Are The Types Of Alternative Investment Funds

For your better understanding, we have divided the Alternative Investment Fund into 3 main categories which are divided into subcategories. These categories originally divided by the SEBI(securities And Exchange Board Of India).

  • Category 1

 This is the category of the funds which invest in new business, SMEs(small and medium enterprises) and start-ups. It is because all of them are considered likely to be politely and economically liable also, all of them have huge growth potential.

The reason why the government promotes and motivates the one who invests in this is, it directly affects the economy of the country in two ways i.e job production and growth.


This category includes the following funds:

  1. Venture Capital Funds
  2. Infrastructure Funds
  3. Angel Funds
  4. Social Venture Funds
  • Category 2

 The SEBI(Securities and Exchange Board Of India) have put all the funds in Category 2 which is not in Category 1 and 3. When you invest the funds in plethora of equities like debt securities and equity securities, you will fall under category 2.

Also, in all these mentioned funds, you will not get any kind of concession or incentives by the government in any way.

This category includes the following funds:

  1. Private Equity(PE) Funds
  2. Debt Fund
  3. Fund Of Funds
  • Category 3

 Similar to category 2, if you will invest funds under this category then also you will not get any kind of concession or incentives from the government.

All the funds whose return period is short come under this category. To reach their targets of small-term capital appreciation, what they do is to employ many diverse and complex trading tactics.

This category includes the following funds:

  1. Hedge Fund
  2. PIPE(private investment in a public equity fund)

What Is P2P Lending and Equity Crowdfunding in Alternative Investment Funds

We don’t want to leave any stone unturned and hence we want to introduce you with two important terms of Alternative Investment Funds and those are P2P Lending And Equity Crowdfunding.

  1. P2P Lending: removing all the financial institutions from the middle, with the help of P2P lending one can take a loan directly from another individual. Other names of p2p lending are “Crowd Lending” or “social lending”.
  1. Equity Crowdfunding: we can understand the term Equity Crowdfunding in the way that it is part of Capital Markets. Suppose you are a group of investors, hence Equity Crowdfunding will enable you to invest in some startups or growing businesses and what you will get in return is equity.


...Last Words

We hope that you will get all the necessary information related to Alternative Investment Funds in this brief article. For you, we just mentioned the information that will make you understand what AIF is all about.

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