An Alternative Investment Fund (AIF) emerges as a special category of investment strategies that can be considered as different from other possible investment activities. These funds are usually privately pooled and target the institutions and high net worth investors, or rather the individual high net worth investors known as the HNIs due to the enormous investment capital that goes along with the product.
Terminology related to AIF investments
The current opportunity for investors interested in investment into AIFs might be useful if they meet the following conditions.
- Eligible investors: The taxpayers are allowed to invest in these funds and these include the resident Indians, non-resident Indians, and even the foreigners.
- Minimum investment requirements: To invest in such SEBI registered mutual fund schemes, the actual individual investors must invest at least Rs. 1 crore while the directors, employees and fund managers must invest at least Rs. 25 lakhs.
- Lock-in period: AIFs have mechanisms that may require the investors to lock in their funds for at least three years, which is long-term as far as investments are concerned.
Investor limitations: The number of investors permitted in each AIF scheme is capped at 1000, with the exception of angel funds, where the maximum number of investors extends to 49.
