Alternative investment funds (AIFs) have gained immense popularity in India as they provide investors with a varied choice of alternative assets such as private equity, real estate, and infrastructure. AIFs offers diversification beyond conventional investment options such as equities, bonds, currencies, or gold.
Despite market volatility caused by global challenges such as the pandemic, Russia-Ukraine war, energy, and oil crisis AIFs in India have shown resilience and piqued the interest of investors with features such as potential for high returns and niche investment opportunities.
The AIF market has experienced tremendous growth considering the growing popularity of AIFs among both domestic and international investors, robust government initiatives, and reforms by the Securities and Exchange Board of India (SEBI). Over the past five years, total Asset Under Management (AUM) (also known as commitments raised in AIFs parlance) has increased close to three times, from US$34,408 million in FY19 to US$101,680 million in FY23.