Alternative Investment Funds (AIFs) in India are fast emerging as a preferred choice for HNIs and institutional investors, with total commitments surpassing ₹8.5 lakh crore in 2025 and over 1,100 SEBI-registered funds across three categories—Category I (startups and social impact), Category II (private equity and debt), and Category III (hedge and trading strategies). Popular examples include private equity, venture capital, real estate, and hedge funds, with top performers like Motilal Oswal, Avendus, IIFL, ICICI Venture, and Tata Capital managing assets in thousands of crores. AIFs require a minimum investment of ₹1 crore (₹25 lakh for employees/directors), typically have a 3–5 year lock-in, and offer access to niche markets, unlisted equities, and custom strategies that can outperform mutual funds, though they come with higher risk and lower liquidity. Investment in AIFs can be done via SEBI-registered platforms and is ideal for long-term, high-risk investors looking to diversify beyond traditional asset classes.

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What Are Alternative Investment Funds (AIFs)?

Alternative Investment Funds are investment vehicles that collect money from investors to invest in assets outside of traditional options like stocks, bonds, or FDs.

Examples of AIFs in India:

 

• • Private Equity

• • Venture Capital Funds

• • Hedge Funds

• • Infrastructure Funds

• • Angel Funds

• • Distressed Asset Funds

• • Real Estate Funds

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Categories of Alternative Investment Funds in India (with Examples)

Category	Focus Area	Examples	Risk Level	Who Should Invest?
Category I	Startups, SMEs, social impact	SIDBI, Bharat Innovation Fund	Moderate	Long-term investors, impact-focused
Category II	Private equity, debt funds	Motilal Oswal, ICICI PE	Moderate to High	HNIs, seasoned investors
Category III	Hedge funds, trading strategies	Avendus Absolute Return Fund	High	Risk-takers, market-savvy investors

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Latest Data: Alternative Investment Funds in India – 2025 Update

 

• • Total Commitments: ₹8.5+ lakh crore

• • Active AIFs: 1,100+

• • Top Performing Funds: Avendus, IIFL, Motilal Oswal, ASK Investment

• • SEBI Registered Categories: I, II & III

• • Eligibility to Invest: Minimum ₹1 crore (₹25 lakh for employees/directors)

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Top 10 Alternative Investment Funds in India (2025 Edition)

Rank	Fund Name	Category	Assets Managed	Why It’s Top
1	Motilal Oswal AIF	II	₹20,000+ Cr	Consistent returns in private equity
2	Avendus Absolute Return Fund	III	₹5,000+ Cr	Hedge strategies with high liquidity
3	IIFL Special Opportunities Fund	II	₹10,000+ Cr	Pre-IPO and unlisted equity exposure
4	ICICI Venture	II	₹15,000+ Cr	Strong deal pipeline
5	Tata Opportunities Fund	II	₹12,000+ Cr	Backed by Tata ecosystem
6	Ask India Realty Fund	II	₹7,000+ Cr	Focus on real estate
7	Nexus Venture Partners	I	₹6,500+ Cr	Early-stage tech startups
8	Chiratae Ventures	I	₹4,000+ Cr	Emerging tech innovation
9	Bharat Innovation Fund	I	₹2,000+ Cr	Government-backed innovation
10	True North	II	₹8,000+ Cr	Consumer and healthcare focused

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Why Are Alternative Investment Funds Gaining Popularity in India?

 

1. 1. High Returns: Often outperform traditional mutual funds

1. 1. Diversification: Real estate, private equity, startups, etc.

1. 1. Private Markets Access: Entry into unlisted or pre-IPO stocks

1. 1. Custom Strategies: Hedge, debt, or hybrid investing

1. 1. Wealthy Investor Friendly: Tailored for HNIs and UHNIs

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Who Can Invest in AIFs in India?

 

• • Minimum Investment: ₹1 crore (₹25 lakh for directors/employees)

• • Eligible Investors: HNIs, family offices, corporates, NRIs, trusts

• • Ideal For: Investors looking for alternatives to mutual funds and FDs

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When & Where to Invest in AIFs?

 

• • When: Best for long-term goals (5+ years)

• • Where: Through SEBI-registered AIF platforms, PMS houses, and private wealth firms

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How Do AIFs Work?

 

1. 1. Investors pool money

1. 1. Fund manager allocates capital into assets based on strategy

1. 1. Gains or losses distributed among investors after fees

1. 1. Locked-in period varies by fund (mostly 3–5 years)

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Must-Know Pros & Cons of AIFs

Pros:

 

• • Access to niche markets

• • Custom investment strategies

• • Potential for high alpha returns

Cons:

 

• • High ticket size

• • Low liquidity (long lock-in)

• • Riskier than mutual funds

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List of Popular Alternative Investment Funds in India

 

• • Motilal Oswal IBEF IV

• • Avendus Absolute Return Fund

• • IIFL PE Series 2

• • Ask Real Estate Special Situations Fund

• • ICICI Venture India Advantage Fund

• • True North Fund VI

• • Tata Opportunities Fund

• • Bharat Innovation Fund

• • Chiratae Ventures AIF

• • Nexus Venture Partners

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Frequently Asked Questions (FAQs)

Q. Is AIF better than mutual funds?
Yes, if you’re looking for high-risk-high-return with long-term commitment.

Q. What is the lock-in period for AIFs?
Usually 3–5 years, can vary depending on fund.

Q. Do AIFs offer guaranteed returns?
No, they are market-linked and performance-based.

Q. How to invest in AIFs in India?
Via wealth management firms or SEBI-registered AIF managers.

Q. Are AIFs regulated?
Yes, SEBI regulates AIFs under the SEBI (Alternative Investment Funds) Regulations, 2012.

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Conclusion: Should You Explore Alternative Investment Funds in India?

If you are financially strong, have a long-term investment vision, and want to diversify beyond stocks and mutual funds, then AIFs are a must-try asset class in India today. With ₹8.5 lakh crore already committed and more than 1,100 options, the space is growing at rocket speed.