Invest In AIF with Regnum Wealth
Alternative Investment Funds are defined as privately pooled investment funds. They are categorized by SEBI as Category I AIF, Category II AIF, and Category III AIF. Assets under management can include start-ups, SME funds, infrastructure funds, private equity funds, or even hedge funds that may be trading in listed or unlisted derivatives depending on the type of fund.
Features and Benefits of Alternative Investment Funds
Diversification is one of the key features of these funds. They have considerable freedom to decide where to invest unlike most funds which are regulated by SEBI.
Non-traditional investment options are available to these funds which are not generally open to all investors.
Potential returns are a factor considering the type of non-traditional assets these funds invest in.
The minimum investment amount is INR 1 Crore depending on the type of AIF.
Types of Alternative Investment Funds
Alternative Investment Funds in India are categorized into 3 types per SEBI rules
Category I
Category I are funds with strategies to invest in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable.These invest in Startups, SME’s, Social ventures, Infrastructure funds, Angel funds, or Venture Capital Funds
Infrastructure Funds
Social Venture Funds
SME Funds
Venture Capital Fund
Category II
Category II are funds which cannot be categorized as Category I AIFs or Category III AIFs. These funds do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the Regulations. Private Equity debt funds that invest in real estate funds, funds for distressed assets, funds of funds, etc.
Real Estate Funds
Private Equity Funds
Funds for Distressed Assets
Category III
Category III are type of fund that invests in Hedge funds or funds which trade with the purpose of making short-term returns and can employ complex and diverse trading strategies, like using arbitrage, derivatives trading, and open-ended funds.
Hedge Funds
Private Investment in Public Equity
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FAQs
These types of funds are primarily aimed at High-Net-worth individuals who are already accustomed and well versed with the investing world. While the potential for returns these funds offer is high, so are the risks.
So, Indian residents, Non-Residents (NRI’s), and Foreign Nationals can invest in Alternative Investment Funds.
Investors who are willing to meet the below criteria should invest in Alternative Investment Funds:
Alternative Investment Funds are taxed according to their category.
Category 1 and 2 AIFs are accorded pass-through status. This means that the income on the fund is not taxed, only the income or profit booked by the investor is taxed. The tax is as per the income slab of the investor. Capital gains the fund makes on the stocks are taxed depending on the holding period that is short term or long term.
Category 3 AIFs are not granted pass-through status. The income generated by such funds is taxed as high as 42.7% depending on various factors of the gains received. Factors can include, dividend, nature of gain, short term or long term, business income among others.
