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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Overview of Alternative Investment Funds (AIFs)

Mr. Rao, a high net worth investor, wants to invest in an AIF but asks how it differs from a mutual fund. Which statement is correct about AIFs in India?

AIFs are privately pooled investment vehicles that raise money through private placement and cannot make public offers like mutual fund NFOs. They must be registered with SEBI and can invest in unlisted securities, unlike the options suggesting public offers, listed-only investing or no registration.

  1. AAIFs are privately pooled vehicles and cannot solicit funds through a public offerCorrect
  2. BAIFs can make public offers like mutual fund NFOs
  3. CAIFs must invest only in listed securities
  4. DAIFs have no registration requirement with SEBI

Explanation

An AIF is a privately pooled investment vehicle that raises funds through private placement, not a public issue. AIFs must register with SEBI, and may invest in unlisted securities. Hence the other statements are incorrect.

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