NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Under SEBI regulations, a Category III Alternative Investment Fund is best described as one that:
A Category III AIF uses diverse or complex trading strategies and may use leverage, including derivatives. Hedge funds are typical examples. Start-up, social venture and infrastructure funds are Category I AIFs, so those descriptions do not fit Category III.
- AInvests in start-ups and early-stage ventures and receives incentives from the government
- BEmploys diverse or complex trading strategies and may use leverage including through listed or unlisted derivativesCorrect
- CInvests only in infrastructure projects and social ventures
- DIs not permitted to be pooled with investors' money
Explanation
Category III AIFs, such as hedge funds, employ diverse or complex trading strategies and may use leverage, including investing in derivatives. Start-up, social venture and infrastructure funds belong to Category I. Pooling investor money is the basic nature of any AIF.
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