AIFs are privately pooled investment vehicles classified under three SEBI categories: Category I (startups, infrastructure, impact), Category II (private equity, debt, distressed assets) and Category III (hedge funds, long-short strategies).
Key features
High minimum investment of ₹1 crore, access to niche strategies not available in mutual funds, and fewer investment restrictions.
Risks to watch
Illiquidity with long lock-ins, high fees (often 2% + 20%), manager risk, and less real-time transparency.
Is an AIF right for you?
They fit investors with diversified portfolios above ₹5 crore who are comfortable locking in capital for 3–5+ years and have done due diligence on the manager. AIFs belong in the satellite portfolio — not the core.