Alternative Investment Assets, or AIFs, are privately pooled investment vehicles that collect funds from intelligent individuals, both domestic and international, and invest them in line with a predetermined investment philosophy for the benefit of its investors.
Alternative Investment Funds (AIFs) are divided into several categories.
According to the Securities and Exchange Board of India (Alternative Investment Funds) Regulations of 2012, Alternative Investment Funds must register in one of three categories.
Category 1: Invests primarily in start-ups, small and medium-sized enterprises, and any other sector that the government deems economically and socially viable.
Category 2: Alternative Investment Funds (AIFs), such as private equity and debt funds, for which the government or any other regulator provides no explicit incentives or concessions.
Category 3: Alternative Investment Funds, like hedge funds or funds that trade with the goal of making short-term profits, or other open-ended funds for which the government or any other regulator provides no explicit incentives or concessions.