AIF
Unlock Private Markets with AIF Precision
Alternative Investment Fund open the door to private equity, venture capital, structured credit, and hedge-style strategies — asset classes that sit entirely outside listed mutual funds. Built for investors ready to commit capital for the long term.
- AMFI Registered Mutual Fund and SIF Distributor
- ARN - 194216
- APMI Registered PMS Distributor
- APRN - 10201
What is an Alternative Investment Fund?
An Alternative Investment Fund (AIF) is a privately pooled investment vehicle, structured as a trust or LLP, that raises capital from sophisticated investors to invest in asset classes outside the reach of mutual funds and SIFs — private equity, venture capital, structured credit, real estate, and complex trading strategies.
Regulated by SEBI
Every AIF operates under the SEBI (Alternative Investment Funds) Regulations, 2012, with defined investor caps, mandatory disclosures, and category-specific reporting standards designed to protect investors.
Beyond Listed Markets
AIFs can invest across listed and unlisted markets — private equity, structured credit, distressed assets, infrastructure — offering flexibility no mutual fund or SIF permits.
Discretionary, Expert-Led Management
Each AIF is run by an experienced manager with a defined mandate, giving investors access to specialised expertise in areas like venture capital or private credit.
Higher Entry, Widest Mandate
A ₹1 crore minimum reflects the widest strategy mandate of any regulated vehicle — including unlisted and private assets.
Investment Vehicle Breakdown
| Product | Minimum Investment | Strategy Flexibility |
|---|---|---|
| Mutual fund | From ₹500 | Tightly defined by category rules |
| SIF | ₹10 lakh | Long-short strategies within SEBI limits |
| PMS | ₹50 lakh | Discretionary, individual portfolio |
| AIF | ₹1 crore | Widest, including unlisted and private assets |
Types of AIFs Categories
SEBI classifies every AIF into one of three categories based on strategy, risk, and regulatory treatment — the category determines what a fund can invest in, whether it can use leverage, and how it’s taxed.
Category I Economically & Socially Desirable Sectors
Funds venture capital, SME growth, infrastructure, and social-impact ventures — sectors SEBI actively encourages. No leverage permitted; income is taxed in investors’ hands. Includes: Venture Capital, SME, Infrastructure, and Social Venture Funds.
Category II Private Equity & Structured Credit
India’s largest AIF category by committed capital — private equity, private credit, real estate, and fund-of-funds. No leverage beyond day-to-day operations; pass-through taxation. Includes: Private Equity, Private Credit/Debt, Real Estate, and Fund of Funds.
Category III Complex, Leveraged Strategies
Hedge-fund-style trading across listed and unlisted markets, with leverage of up to 2x NAV permitted. Taxed at the fund level at the maximum marginal rate. Includes: Hedge-Style/Long-Short Funds and PIPE Funds.
What You Should Know Before Investing
Before investing in an Alternative Investment Fund (AIF), it’s important to understand its investment threshold, categories, taxation, and risks. Here’s what every investor should know.
₹1 Crore Minimum Investment
An AIF requires a minimum commitment of ₹1 crore per investor.
- Applies per scheme, not cumulatively across an AMC.
- Most AIFs are structured as closed-ended, with capital called in tranches (drawdowns) rather than invested all at once.
Three SEBI Categories
SEBI classifies all AIFs into three categories based on investment strategy.
- Category I: venture capital, SME funds, infrastructure and social-impact funds with certain regulatory concessions.
- Category II: private equity, private credit, real estate debt, and fund-of-funds, the most widely used category.
- Category III: hedge-fund style strategies, including leverage and complex trading.
Long Lock-in Periods
Most Category I and II AIFs are closed-ended, typically running 5 to 10 years.
- Lock-ins commonly range from 1 to 3 years or more depending on the strategy.
- Category III funds may offer relatively more liquidity but still differ materially from mutual funds.
- Early exit, where permitted, is usually subject to the fund’s specific terms.
Who Can Invest
AIFs are built for sophisticated investors, not the general retail base.
- Eligible investors include Indian residents, NRIs, and foreign nationals.
- Each scheme is capped at a maximum of 1,000 investors (49 for angel funds).
- Large-value funds for accredited investors carry a substantially higher minimum commitment.
How AIFs Are Taxed
AIF taxation depends on the category and structure of the fund.
- Category I and II AIFs are typically pass-through vehicles: income is taxed in the hands of investors, not the fund.
- Category III AIFs are generally taxed at the fund level, with the rate depending on the nature of income.
Key Risks to Understand
AIFs carry a materially different risk profile from mutual funds and SIFs.
- Illiquidity: capital is typically locked in for years, with limited or no interim redemption.
- Concentration risk: many strategies invest in a relatively small number of positions.
- Valuation risk: unlisted assets are harder to price than listed securities.
- Manager and strategy risk: outcomes depend heavily on the specific fund manager’s execution.
Two Kinds of Investors
Not every investor is the right fit for an AIF. Use this to check whether it aligns with your strategy.
You're Ready for an AIF
You already hold a diversified core portfolio and are looking to allocate a smaller portion to private markets.
- Can commit at least ₹1 crore for several years without needing access
- Understand illiquidity and drawdown-based capital calls in practice
- Comfortable with limited transparency on underlying, often unlisted, holdings
- Able to sit through a long investment horizon without needing to exit early
An AIF May Not Fit Yet
This would represent the majority of your investable assets, or the money is earmarked for a near-term goal.
- Funds are earmarked for a goal within the next several years
- May need to withdraw a portion of the capital at short notice
- Still building a core allocation through mutual funds, SIFs, or PMS
- Not yet comfortable waiting years for results — or losses — to become clear
Start Your AIF Journey with a Wealth Manager
Investing with us is seamless, secure, and fully aligned with your financial goals — from your first login to your first review.
Connect With Our Wealth Manager
We pair you with a dedicated Dhanvantree wealth manager who understands AIF structures, categories, and eligibility norms.
Complete Your KYC & Eligibility Check
Your wealth manager guides you through PAN, Aadhaar, and accreditation checks, and confirms you can commit the ₹1 crore minimum for the fund’s full tenure.
Choose Your Category, Together
Your wealth manager walks you through Category I, II, or III options and shortlists funds matched to your risk appetite, liquidity needs, and investment horizon.
Track with Ongoing Support
Monitor performance and risk exposure through your personal dashboard.
Your Trust, Our Priority
We operate under the regulatory guidelines of the Association of Mutual Funds in India (AMFI) and the Securities and Exchange Board of India (SEBI). Every recommendation is disclosed, and every credential is verifiable.
- AMFI Registration Number: ARN-194216
- Current Validity of ARN: 31/12/2027
- Initial Registration Date: 31/12/2021
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Frequently Asked Questions
What is the minimum investment in an AIF?
₹1 crore per investor. Employees or directors of the AIF or its manager may invest a minimum of ₹25 lakh.
Is an AIF the same as a mutual fund?
No. AIFs are a distinct, privately pooled category regulated separately from mutual funds, with far greater flexibility to invest in unlisted and private assets, and typically longer lock-ins and lower liquidity.
How is an AIF taxed?
It depends on the category. Category I and II AIFs are usually pass-through, with tax payable by the investor. Category III AIFs are generally taxed at the fund level. Consult a tax advisor for your specific position.
What happens if I want to exit before the fund's term ends?
Most Category I and II AIFs are closed-ended with limited or no interim redemption. Any early exit is governed by the fund’s specific terms, and is not guaranteed.