It refers to any privately pooled investment vehicle which collects funds from investors.
Fund established or incorporated in India (Whether from Indian or Foreign Sources).
Formed as a trust or company or a LLP or body corporate.
Presently not covered by any Regulation of SEBI governing fund management (like, Regulations governing Mutual Fund or Collective Investment Scheme) nor coming under the direct regulation of any other sectoral regulators in India-IRDA, PFRDA, RBI.
Hence, in India, AIFs are private funds which are otherwise not coming under the jurisdiction of any regulatory agency in India.
Diversification: Provides investment diversification- can also invest in real estate, unlisted shares, derivatives and structured products.
Pool Making of funds: Enables an investment Manager to privately pool the funds & provides investments avenues
Benefits of leveraging: Leverage allowed under Category III AIF- which may generate higher returns as compared to other pooled investment options.
Higher returns & reduced cost: Leverage allowed under Category III AIF- which may generate higher returns as compared to other pooled investment options.