InvestorQ : What is Alternate Investment Fund (AIF)?
Sneha Balasubramanian made post

What is Alternate Investment Fund (AIF)?

Manish Mehta answered.
2 years ago
AIF is any fund incorporated in India that is a privately pooled investment vehicle. It collects funds from investors, be it Indian or foreign, and invest them following a specified investment policy for the benefit of its investors. It does not fall in any of the conventional investment categories like cash, stocks, or bonds, it is an entirely different class of investment. It includes commodities, hedge funds, private equity, venture capital, managed futures, and derivative contracts. Generally, alternate investment funds are illiquid and not regulated by SEC.

Alternate Investment funds are preferred by high net-worth individuals, or institutional investors as there is a higher risk associated with the investment, it lacks regulation, and are complex. Since these funds are not regulated, the risk of fraud increases manifolds. Therefore, it is advisable to invest in alternate investment funds only after making thorough research and due diligence.

Since ATFs (Alternate Investment Funds) have a lower correlation with those of standard asset class, this makes them move opposite to the stock or bonds markets hence, they can be a great investment tool for portfolio diversification.