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What is AIF?

As the name implies, Alternate Investment Funds offer an alternate to traditional investment avenues such as direct equitymutual funds, and bonds to HNIs and UHNIs seeking exclusive investment opportunities for better returns. Alternative Investment Funds (AIFs) represent a sophisticated class of pooled investment vehicles, attracting institutional and high-net-worth investors with a minimum ticket size of Rs.1 crore. AIFs are regulated by SEBI (Alternative Investment Funds) Regulations of 2012 and are usually structured as corporations, Limited Liability Partnerships (LLPs), trusts, etc. AIFs combine the operational ease of Mutual Funds and provide flexibility similar to that of PMS to deliver higher returns through defined investment strategies.

AIFs typically target alternative asset classes like venture capital, private equity, hedge funds, infrastructure funds, etc and are driven by well-defined investment objectives. AIFs are classified into multiple categories namely - Category I, II, III; based on the investment opportunities they are allowed to participate in.

Why should you invest in AIF?

No Demat Account Required

Skip the hassle, invest in AIF without a demat account.

Exclusive Investment Opportunities

Get access to unique, high-potential investment options.

Diversification

Invest in Real-estate, Private equity, Commodities, Distressed Assets and more for diversification in its true sense

Limited Regulatory Restrictions

Deploy Long Short and other complex strategies without regulatory restrictions.

Why invest in AIF with motilal oswal?

Trusted by 42,000+ investors

Multiple PMS Strategies to choose from

16K+ crores of Asset Under Management

3 Decades of experience in equity investments

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AIF Categories to know

Category I

Includes primary investments in start-ups, early-stage ventures, SMEs, and sectors deemed socially or economically beneficial by regulators. These funds are expected to positively impact the economy, potentially receiving government incentives or concessions. Angel Funds, a part of this category, pool investments from high net worth individuals and entities with specific experience and qualifications.

Category II

Includes debt funds and private equity funds, offering a defensive investment option with diversified portfolios managed by experienced fund managers to reduce investors' risk profiles. Debt funds in this category invest in debt or debt securities of listed or unlisted companies.

Category III

Category III AIFs engage in sophisticated trading strategies like arbitrage, margin trading, futures, and derivatives to generate returns. Hedge funds, focused on short-term gains, and Private Investment in Public Equity (PIPE) funds, which purchase publicly traded stock below market price, are examples of funds that fall under this category.

Different types of AIFs

Equity & Private Equity AIFs

Invest in listed and unlisted equity shares of companies across all growth stages with Equity AIFs

Multi Factor AIF

Invest in top 20-30 stocks picked through Factor Analysis.

Distressed Asset AIFs

Explore high return fixed income opportunities through Debt Financing for distressed companies

Real Estate AIFs

Get access to early stage real-estate investment opportunities with renowned builders through Real Estate AIFsa

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What are Alternative Investment Funds (AIFs)?

AIFs are a sophisticated class of pooled investment vehicles offering alternatives to traditional investments like direct equitymutual funds, and bonds. They are designed for high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) seeking exclusive investment opportunities.

What is the minimum amount required to invest in AIF?

The minimum ticket size of investment in an AIF fund is INR 1 Crore.

How are AIFs regulated?

AIFs are regulated by the Securities and Exchange Board of India (SEBI) under the Alternative Investment Funds Regulations of 2012.

Who can invest in AIFs?

AIFs are typically aimed at institutional and high-net-worth investors, with a minimum investment ticket size of Rs. 1 crore.

What types of investments do AIFs focus on?

AIFs target alternative asset classes such as venture capital, private equity, hedge funds, infrastructure funds, and more.

What are the different categories of AIFs?

AIFs are classified into three main categories:

Category I: Investments in start-ups, early-stage ventures, SMEs, and sectors deemed beneficial to the economy.

Category II: Includes debt funds and private equity funds, focusing on defensive investment options.

Category III: Engages in sophisticated trading strategies like arbitrage, margin trading, and derivatives.

Does investment in AIF require a Demat Account?

No. You can start investing in AIF without a DEMAT Account.

What is Category I AIF?

Category I AIFs primarily invest in start-ups, early-stage ventures, SMEs, and sectors that are socially or economically beneficial. They often receive government incentives or concessions.

What is Category II AIF?

Category II AIFs include debt funds and private equity funds. These funds offer diversified portfolios managed by experienced fund managers, focusing on reducing investors' risk profiles.

What is Category III AIF?

Category III AIFs engage in sophisticated trading strategies like arbitrage, margin trading, futures, and derivatives. Examples include hedge funds and Private Investment in Public Equity (PIPE) funds.

 What types of AIFs are available?

Equity & Private Equity AIFs: Invest in listed and unlisted equity shares of companies across various growth stages.

Multi Factor AIF: Invest in top 20-30 stocks selected through Factor Analysis.

Distressed Asset AIFs: Provide high-return fixed income opportunities through debt financing for distressed companies.

Real Estate AIFs: Access early-stage real estate investment opportunities with renowned builders.

How can AIFs contribute to my investment portfolio?

AIFs offer diversified investment opportunities and potential for higher returns through well-defined strategies, making them a valuable addition to any high-net-worth investment portfolio.

 What are the fees and profit sharing structure in AIF?

There is no defined structure for fee and profit sharing in AIF as each fund is managed separately and by a different team of experts. To know more on this, you can send your query to amc@motilaloswal.com

Who is a ‘Sponsor’ in AIF?

A sponsor is an individual or group who establishes the AIF. This includes the promoter in the case of a company and the designated partner in the case of a limited liability partnership.