NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
An Alternative Investment Fund (AIF) is classified by SEBI as Category III. Which description best fits this category?
Category III AIFs are funds that use diverse or complex trading strategies and may employ leverage, including through listed or unlisted derivatives. Hedge funds are typical examples, whereas venture and social venture funds belong to Category I.
- AFunds investing in start-ups and social ventures that receive government incentives
- BFunds that employ diverse or complex trading strategies, and may use leverage including through derivativesCorrect
- CFunds that invest only in listed government securities
- DFunds that must be open-ended and offer daily redemption to retail investors
Explanation
Category III AIFs, such as hedge funds, employ diverse or complex trading strategies and may use leverage. Start-up and social venture funds fall under Category I. Daily redemption for retail is not a feature of AIFs.
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