NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Under SEBI regulations, Category III Alternative Investment Funds are best described as funds that:
Category III AIFs employ diverse or complex trading strategies and may use leverage, including through derivatives. Hedge funds fall in this category. Category I funds are the ones investing in start-ups, SMEs, social ventures or infrastructure, which governments may wish to encourage.
- AReceive government incentives for investing in start-ups and social ventures
- BInvest only in infrastructure projects with a minimum tenure of ten years
- CEmploy diverse or complex trading strategies and may use leverage, including through derivativesCorrect
- DInvest only in unlisted debt of small and medium enterprises without any leverage
Explanation
Category III AIFs, such as hedge funds, use diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Government incentives and social or infrastructure focus relate to Category I AIFs.
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