HNW investing — VC + PE + hedge funds. ₹1 crore minimum. SEBI regulated. Category I (VC, social), II (PE, real estate, debt), III (hedge + algo). Specialized strategies + lock-in.
AIF = Alternative Investment Funds. SEBI-regulated investment pools for HNW + institutional investors. KEY: (1) ₹1 CRORE minimum investment (₹25 lakh for angel funds). (2) MIN 20 investors per scheme. (3) 3 CATEGORIES based on investment strategy. (4) PRIVATE PLACEMENT (not retail). (5) Mostly close-ended (3-10 year lock-in). HNW WEALTH MANAGEMENT tool.
CATEGORY I (Government incentivized): Venture Capital Funds, Angel Funds, SME Funds, Infrastructure Funds, Social Venture Funds. TAX BENEFITS available. CATEGORY II (Most popular): Private Equity, Real Estate, Debt Funds. NO leverage allowed. CATEGORY III (Higher risk): Hedge Funds, Algorithmic Trading, PIPE deals. LEVERAGE allowed. SHORT-SELLING possible. HIGHER returns + higher risks.
AIF TAX: (1) CATEGORY I + II: 'PASS-THROUGH' status. Income flows to investors directly. Investor pays tax on their share. (2) CATEGORY III: TAXED AT FUND LEVEL — usually at MAX MARGINAL rate. Tax inefficient. (3) Long-term capital gains specific rules. (4) DIVIDENDS taxable in investor's hand. CONSULT CA: AIF taxation complex. Most HNW need specialized advisors.
(1) MUTUAL FUND (MF): Retail. Min ₹500. Diversified. Daily liquidity. SEBI regulated. (2) PORTFOLIO MANAGEMENT SERVICES (PMS): HNW. Min ₹50L. Customized stock portfolio. Daily NAV. (3) AIF: HNW + institutional. Min ₹1cr. Pooled fund. Limited liquidity. Specialized strategies. STRATEGIC: (1) RETAIL: MF. (2) HNW want personalization: PMS. (3) HNW want VC/PE/hedge fund exposure: AIF. Combination common.
POPULAR AIF MANAGERS: (1) Edelweiss AIF. (2) Avendus Capital. (3) ASK Investment Managers. (4) Kotak Investment Advisors. (5) IIFL Wealth. (6) ICICI Venture. (7) BlackRock India AIF. DUE DILIGENCE: (1) MANAGER track record 5+ years. (2) Strategy clarity. (3) Fee structure (typically 2/20 — 2% mgmt + 20% performance). (4) Lock-in period. (5) Past fund performance. (6) Audit + compliance. (7) Investor protection. ENGAGE CA + Wealth Advisor.