In 2025, AIF Category 3 funds have become the hottest alternative investment option in India, attracting over 54% of new flows into Alternative Investment Funds (AIFs). Designed for high-net-worth investors, these SEBI-regulated funds employ hedge fund–like strategies such as long-short trading, derivatives, and arbitrage. The results? In months when the Nifty and BSE fell 6–8%, top AIF Category 3 funds lost only 3%, and some even made profits. Leading names like Ampersand Growth, True Beacon, and Negen Undiscovered Value have outperformed equity indices consistently. However, they demand a minimum ₹1 crore investment (₹25 lakh for employees) and carry high risk, complex strategies, and evolving regulatory challenges.
What Is AIF Category 3?
AIF Category 3 (Alternative Investment Fund Category III) is a special type of investment vehicle in India that works very differently from mutual funds. Unlike traditional funds that only buy and hold stocks, AIF Category 3 funds can:
- Go long and short (make money even if stocks fall)
- Use derivatives and leverage (advanced tools to magnify returns)
- Do arbitrage trading (profit from price differences in markets)
Think of them as India’s version of hedge funds, but under SEBI’s regulatory framework. The main aim is absolute returns, meaning they try to make money regardless of whether the market is going up or down.
Key Features of AIF Category 3
- Complex strategies: Includes short-selling, leverage, arbitrage, and derivatives.
- Risk & return: Very high risk, but also potential for very high returns.
- Minimum investment: ₹1 crore (₹25 lakh for fund employees or directors).
- Liquidity: Medium to high, depending on the design of the fund.
- Regulatory oversight: SEBI-regulated, but tax rules are still evolving.
Latest Update (2025) – Numbers, What & Which
- 54% of fresh inflows into AIFs in India are now going into AIF Category 3 funds.
- During the February 2025 market crash, 31 out of 33 long-short funds beat the BSE 500 TRI index.
- 10 funds delivered positive returns even as broader markets declined.
- Top-performing funds: Ampersand Growth Opportunities, Negen Undiscovered Value Fund, Sameeksha Equity AIF, True Beacon One, and SBI Optimal Equity Fund.
When, Where, Who & Whose
- When: Available throughout the year; investments accepted on a rolling basis.
- Where: Through SEBI-approved asset management companies, private wealth managers, and platforms like PMS Bazaar and True Beacon.
- Who should invest: High-net-worth individuals (HNIs), NRIs, institutions, and finance-savvy investors.
- Whose money is at stake: Only those willing to take high risks for equally high rewards.
Why AIF Category 3 Matters in 2025
- Why: Because these funds can profit even in falling markets—a rare ability.
- Whether to invest: Only if you have enough capital, can handle high risk, and understand financial strategies.
- Must know: Taxation rules are still unclear, SEBI regulations are evolving, and compared to global hedge funds, India still has market depth limitations.
Best, Must-Try & Must-Know Tips
- Best funds: Look for proven performers with transparent reporting.
- Must try: Diversify within AIF Category 3—combine long-only funds with long-short funds.
- Must know: Entry is strict (₹1 crore minimum), and risk is very high.
Quick Facts Table – AIF Category 3
| Feature | AIF Category 3 |
|---|---|
| Focus | Hedge fund-like, absolute returns |
| Main strategies | Long-short, derivatives, arbitrage, leverage |
| Minimum investment | ₹1 crore (₹25 lakh staff) |
| Who should invest | HNIs, NRIs, professionals |
| Risk level | Very High |
| Liquidity | Medium to High |
| Regulatory framework | SEBI, FEMA, evolving tax clarity |
| Best funds (2025) | Ampersand, Sameeksha, True Beacon, Negen, SBI Optimal Equity |
Why Learn AIF Category 3 with Capital Gurukul?
At Capital Gurukul, we don’t just talk about AIF Category 3—we teach it, simplify it, and help you master it.
- We provide financial education, trading courses, and business setup opportunities (like becoming a sub-broker).
- We guide you to avoid losses—because without proper knowledge, these high-risk funds can drain your wealth.
- Unlike others, we focus on making you independent and financially strong, not just selling services.
👉 If you ignore learning from Capital Gurukul, you risk missing out on high-income opportunities and staying dependent on others for financial advice.
Final Call – Secure Your Future Today
AIF Category 3 is the future of high-risk, high-return investing in India. But without the right knowledge, it’s also a quick way to lose money. That’s why Capital Gurukul is your best partner—to learn, to invest, and to grow.
If you want to create your demat account and get expert guidance from Capital Gurukul, click below: