Alternative Investment Funds (AIF) are a privately pooled investment vehicle, set up as a separate entity, which collects funds from its investors for investing it in accordance with a defined investment policy for the benefit of its investors.
Alternative Investment Funds raise funds from investors by way of issue of units. An AIF would often depart from traditional sources of investments like equity and bonds to invest in more complex products like derivatives.
Alternative Investment Funds, unlike Mutual Funds or other Collective Investment Schemes are typically subject to less stringent regulatory control and disclosure requirements.
AIFs have a high minimum investment requirement and have a cap on the maximum number of investors.
For example, in India, as per the Alternative Investment Funds Regulations, an Alternative Investment Fund shall not accept from an investor, an investment of value less than one crore rupees and no scheme of the Alternative Investment Fund shall have more than one thousand investors.
Example of AIFs are Hedge Funds.
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