Alternative Investment Funds (AIFs) hold a strong appeal, but they are specifically designed for a certain class of investor. In India, SEBI has set a high minimum investment threshold for AIFs, typically _1 crore or more. This regulation is in place for a crucial reason: investor protection.
The assets within AIFs are complex, illiquid, and carry higher risks than traditional investments. The high entry barrier ensures that only ‘sophisticated investors’Ñtypically High Net-worth Individuals (HNIs) and institutionsÑwho fully understand these risks and have the financial capacity to bear them can participate. While this excludes retail investors, it maintains the integrity of the alternative market and protects those who may not be equipped for such strategies.
