Alternative Investment Funds (AIF) are privately pooled funds registered with SEBI. They invest in areas that ordinary mutual funds usually do not reach, such as unlisted companies, private credit, real estate projects or long-short equity strategies. SEBI groups them into Category I, II and III based on what they invest in and how they operate.
The minimum investment is generally ₹1 crore per investor. Many AIFs are close-ended with lock-ins of several years, so your money may not be available until the fund winds up. We offer AIFs available where we are empanelled, and we spend most of our time explaining the lock-in, fees and exit terms clearly.
Who it suits
- Investors with ₹1 crore or more to commit
- Money not needed for 5 years or more
- Families wanting private market exposure
- A small share of a large portfolio
How AIF works
- 1
Pick a category
We explain the difference between Category I, II and III funds and which one matches your goal.
- 2
Study the memorandum
Each AIF has a private placement memorandum covering strategy, fees, lock-in and risks, which we go through with you.
- 3
Commit capital
You sign a contribution agreement for at least ₹1 crore, which may be drawn down in stages.
- 4
Receive distributions
As the fund exits investments, proceeds are returned to you, usually towards the end of the tenure.
Why families choose it
Access to private markets
AIFs can invest in unlisted businesses and private credit that are hard to reach otherwise.
Diversification
Returns from private or special-situation assets may not move in step with listed markets.
Specialist managers
Funds are run by teams focused on a specific sector or strategy.
Staged investment
Many funds draw your commitment over time, so the full amount is not needed on day one.
Things to know, and risks
- Most AIFs are illiquid, and your money may be locked in for several years.
- Valuations of unlisted holdings are estimates and may change sharply at exit.
- Fees, including performance fees and set-up costs, can be high relative to mutual funds.
- A single fund may hold only a few investments, so one failure can hurt returns significantly.
- Tax treatment varies by category and can be complex.
Tax treatment
Category I and II AIFs are generally pass-through, meaning income is taxed in your hands as if you earned it directly. Category III AIFs are usually taxed at the fund level before distribution. The exact treatment depends on the fund's structure and income type, and tax rules change, so confirm with your tax professional before investing.
For families in Tirupati
For business families and professionals in the Tirupati region, a large sum often arrives at once, for example after selling a property, a stake in a business or a clinic. An AIF may suit a part of such money, but only the part you can leave untouched for years. We help you work out that amount first, keeping near-term family needs and emergencies separately covered.
Run the numbers
CAGR Calculator
If an investment grew from one value to another over several years, what steady yearly rate would produce the same result? That is CAGR. This calculator gives you the CAGR, the absolute return and the rupee gain, so you can compare a mutual fund, a property or an old policy on an equal, per-year basis.
Frequently asked questions
What is the minimum investment for an AIF in India?
The minimum investment for an AIF is generally ₹1 crore per investor, as set by SEBI. Accredited investors and employees of the fund manager may be allowed different amounts. Many funds draw the committed amount in stages rather than all at once.
What are Category I, II and III AIFs?
Category I AIFs invest in areas the government wants to encourage, such as startups and infrastructure. Category II covers private equity and private credit funds. Category III uses more complex trading strategies, including long-short equity and derivatives, and may use leverage.
Can I exit an AIF before its tenure ends?
Usually not easily. Most Category I and II AIFs are close-ended, so your money stays invested until the fund winds up, often after several years. Some Category III funds are open-ended and allow periodic exits, sometimes with an exit load.
How is an AIF different from PMS?
An AIF pools money from many investors into one fund, while PMS manages a separate portfolio in your own demat account. AIFs need a ₹1 crore minimum and often lock in money, whereas PMS starts at ₹50 lakh and usually allows withdrawals at any time.
Are AIF returns fixed?
No, AIF returns are not fixed. Even private credit funds that target a certain yield can face defaults or delays. Returns depend on how the underlying investments perform, the fees charged and the timing of exits, so we treat any target return as an estimate, not a promise.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This page is for general information and is not a recommendation to buy any specific product.
Last reviewed 12 Oct 2026.