Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
As per Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 Alternative Investment Funds shall seek registration in one of the three categories:
Category I: These funds are invested in businesses that are new or have the potential to grow financially such as Start Ups, Small and Medium Enterprises. The government encourages investments in these ventures as they have a positive impact on the economy with regards to high output and job creation.
Category II: Under this category, funds that are invested in equity securities and debt securities are included. Those funds not already under Category 1 and 3 respectively are also included. No concession is given by the government for any investment made for Category 2 AIFS
Category III : Category 3 AIFs are those funds which give returns under a short period of time. These funds use complex and diverse trading strategies to achieve their goals. There is no known concession or incentive given towards these funds specifically by the government.
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SMC facilities the different AIFs available in the market to its investors as per the investment objective and risk profile of the investors.