AIF as a Product: where it sits, and what you give up
An Alternative Investment Fund is the product offered above a PMS, a pooled fund for sophisticated investors starting at one crore rupees. This is the short, product-side view. For how the manager works, earns and should be chosen, see the AIF Manager guide.
What the product is, and where it sits
An AIF pools money from wealthy and institutional investors to run a defined strategy, often in assets ordinary funds cannot reach, such as private companies or structured credit. It is the top rung of a ladder that climbs in minimum size, complexity and illiquidity.
What to weigh as a product
- Illiquidity. Most AIFs lock your money for years, with no daily exit. This is the defining feature.
- High minimum and complexity. One crore to enter, with strategies that are hard to benchmark and value.
- Heavy fees. A management fee plus carry, the manager's share of the profits above a hurdle.
Where it fits, and what to check
An AIF suits a genuinely sophisticated investor, well past the one crore minimum, who wants private or alternative exposure and can lock money away for years. Confirm the fund is SEBI-registered via the official register (select Alternative Investment Funds): SEBI recognised intermediaries, and read the Private Placement Memorandum for the strategy, fees, hurdle, carry and lock-in.
Source: SEBI, recognised AIFs
For the full picture: the AIF Manager, how they work, earn and should be chosen →
An AIF buys access to private strategies, at the cost of liquidity, simplicity and a high entry.
It is the most exclusive product on the shelf, and exclusivity is not the same as suitability. The product question is whether you understand the strategy and can afford to lock the money away.
This guide describes how the product works. It isn't a recommendation to invest in an AIF or to avoid one. These are complex, illiquid, high-fee vehicles for sophisticated investors, and whether one suits you depends on your wealth, timeframe and understanding of the strategy.