Alternative
investment funds.
Privately pooled funds, registered with SEBI, that invest where mutual funds and PMS cannot — startups, private companies, private credit, real estate and hedge strategies. From ₹1 crore.
Two fee levels, side by side.
AIFs start at ₹1 crore and usually charge a yearly management fee plus a share of gains above a hurdle. Put in the total yearly cost you expect from two funds and see the gap over the fund's life.
- Low-cost Value
- ₹1,94,87,171
- High-cost Value
- ₹1,77,01,422
An illustration on the figures above, not a quote and not advice.
What an AIF is, and where we sit
An Alternative Investment Fund is a privately pooled vehicle registered with SEBI. It collects money from a limited group of investors and invests it according to a stated policy — often in assets that are not listed on a stock exchange at all. You hold units of the fund, not the underlying investments.
AIFs are for larger, patient money: the minimum is ₹1 crore, and most funds lock your money in for the life of the fund, usually several years. L.F.C. Securities acts as a distributor — we help you understand the category, compare funds and complete the paperwork. The fund is run by its SEBI-registered manager.
Mutual fund, PMS or AIF
Three regulated ways to have a professional manage money. The differences are the minimum, who owns the securities, and how easily you can leave.
| Mutual fund | PMS | AIF | |
|---|---|---|---|
| Minimum | ₹500 a month by SIP in many schemes | ₹50 lakh | ₹1 crore |
| Who owns the securities | The fund — you hold units | You — in your own demat | The fund — you hold units |
| What it can invest in | Mostly listed shares and bonds | Mostly listed shares | Unlisted companies, private credit, real estate, hedge strategies |
| Leaving | Open-ended schemes on any business day | Any time; exit load capped by SEBI for 3 years | Category I & II locked for the fund’s life (3+ years) |
| Tax | In your hands on redemption | In your hands, trade by trade | Category I & II in your hands; Category III at the fund |
| Reporting | NAV every business day | A report at least every quarter | NAV at least every six months (quarterly for Category III) |
A summary of the SEBI frameworks as they stand in 2026. Each fund’s private placement memorandum governs; read it before you invest.
What to understand before committing
An AIF is a long, illiquid commitment. These are the questions to settle first.
Category I and II funds are close-ended, with a minimum tenure of three years and often seven to ten. There is usually no way out early — only money you will not need belongs here.
Many funds take a commitment from you and draw it down over the first few years as they find investments, rather than all at once.
A management fee each year, and usually a share of the gains above a hurdle (carried interest). Every fee is in the private placement memorandum.
Unlisted investments have no daily price. The NAV is the manager’s valuation, reported at least every six months for Category I and II.
Category I, II or III — the category decides almost everything.
How long your money is locked, whether the fund may borrow, and how the gains are taxed all follow from it. Pick one.
Category I
Funds that back what is being built: startups and early-stage ventures, angel funds, SME funds, social-impact funds and infrastructure funds.
- Invests in
- Startups, early-stage companies, SMEs, social ventures, infrastructure
- Structure
- Close-ended, minimum tenure three years
- Leverage
- Not allowed, beyond day-to-day needs
- Tax
- Pass-through — taxed in your hands
What does your amount open up?
Each vehicle has a minimum set by SEBI. Move the amount and see which ones it reaches — then the question is which suits you, and that comes after a conversation, not a slider.
- Within reachMutual fundsFrom ₹500 a month by SIP
Pooled, regulated and open every business day — where most portfolios start.
How it works → - Within reachSpecialized investment fundsFrom ₹10 lakh
A newer category from mutual fund houses (SEBI, 2025) that can run strategies such as long-short.
- Within reachPMSFrom ₹50 lakh
A portfolio run for you alone, with the shares in your own demat.
How it works → - Within reachAIFFrom ₹1 crore
Private companies, private credit, real estate and hedge strategies, in a pooled fund.
How it works →
₹1 crore reaches 4 of 4 — every vehicle on this list. Reaching a minimum does not make a product suitable; we look at your horizon, your need for access to the money and your risk first.
AIF, step by step.
- 1Know the category
Category I, II or III — the lock-in, the tax and the risk follow from it.
- 2Read the memorandum
Strategy, tenure, drawdown schedule and every fee, in the private placement memorandum.
- 3Commit
Sign the contribution agreement; the fund calls your money in as it invests.
- 4Track
NAV and reports at least every six months, quarterly for Category III.
Understand AIF properly.
How it works, the types, both sides and the comparisons — for when you want the full picture.
Why investors use AIFs
Startups, unlisted companies, private credit and real estate — assets a listed-market portfolio does not reach.
Returns that depend on different things from the stock market, which can steady a large portfolio.
Long-short and other hedge strategies that a long-only fund cannot run (Category III).
Every AIF is registered with SEBI, issues a private placement memorandum, and reports to its investors on a set timetable.
AIF, answered.
A privately pooled investment fund registered with SEBI under the AIF Regulations, 2012. It invests according to a stated policy, often in unlisted assets such as private companies, private credit or real estate, or in hedge strategies.
₹1 crore per investor. The fund’s own employees and directors can invest from ₹25 lakh.
Category I invests in startups, early-stage companies, social ventures and infrastructure. Category II covers private equity, private credit and real estate — anything not in I or III. Category III runs trading and hedge strategies, including long-short, and may use leverage.
Category I and II funds are close-ended with a minimum tenure of three years, and many run seven to ten. Category III funds may be open-ended, with periodic redemption windows, or close-ended.
Category I and II are pass-through: income other than business income is taxed in your hands as if you had earned it directly. Category III is taxed at the fund level, and what you receive is not taxed again.
Usually a yearly management fee and a share of the gains above a hurdle rate, called carried interest or a performance fee. Every AIF must offer a direct plan; if you invest through a distributor, what the distributor is paid is disclosed to you.
The manager values the fund at least every six months for Category I and II, and at least every quarter for Category III, and reports to investors.
We are distributors: we help you understand the category, compare funds on their strategy, track record, fees and terms, and complete the paperwork. The fund is run by its SEBI-registered manager.
Beyond the listed market, with your eyes open.
We will explain the category, the lock-in and the fees before we talk about any fund — and say so if an AIF is the wrong tool.