If you are investing in an AIF that deploys capital outside India (like an overseas Feeder Fund), you are taking on Currency Risk. If the Indian Rupee depreciates against the US Dollar, your returns in Rupee terms actually increase. However, if the Rupee strengthens, your returns could shrink.
Many investors view this as a feature, not a bug. Investing globally acts as a hedge against the depreciation of your home currency. It protects your purchasing power on a global scale, adding another layer of diversification beyond just asset allocation.
