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Alternative investment funds see big bucks coming from HNIs

AIFs have higher investment floors and are generally considered riskier than regular mutual funds because they are allowed to invest in unlisted securities and most can use borrowed funds.

September 06, 2022 / 11:07 AM IST

High networth individuals (HNIs) and Ultra HNIs (UHNIs) have significantly increased their allocation to Alternative Investment Funds (AIFs), according to Sebi data.

It has gone up by 42.5% over a year– from Rs 4.87 lakh crore in June 2021 to Rs 6.94 lakh crore in June 2022. The larger part of it has gone to AIF Category-II funds, which saw a 43.7% rise y-o-y, with commitments raised going up from Rs 3.9 lakh crore in June 2021 to Rs 5.6 lakh crore in June 2022.

Graphic: Upnesh Rawal Graphic: Upnesh Raval

AIFs are of three kinds – Category I, Category II and Category III, and they invest pooled private funds. They have higher investment floors and are generally considered riskier than regular mutual funds because they are allowed to invest in unlisted securities and most can use borrowed funds. AIF Category II funds aren’t allowed to use borrowed funds other than for their operational expenses.