Top Alternative Investment Funds in India

As per SEBI regulations, the minimum investment amount for Alternative Investment Funds (AIFs) in India is ₹1 crore. However, some AIFs might have higher minimum investment requirements based on their strategy and target investors.

SEBI classifies AIFs into three categories:

• Category I: Includes venture capital funds, angel funds, social impact funds, and SME funds
• Category II: Includes private equity funds, debt funds, and real estate funds
• Category III: Includes hedge funds, PIPE funds, and strategy funds using complex trading strategies

Tax treatment of AIF investments depends on the category, investment strategy, and holding period. Generally, for Category I and II AIFs, income is passed through to investors and taxed as per their applicable tax rates. For Category III AIFs, income is typically taxed at the fund level.

Unlike mutual funds, AIFs have higher minimum investment requirements, cater to sophisticated investors, can employ more complex strategies, have different regulatory frameworks, and often have longer lock-in periods. AIFs also have more flexibility in investment strategies compared to mutual funds.