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

Under the SEBI (Alternative Investment Funds) Regulations, 2012, which of the following is a category of AIF that is permitted to invest in start-ups, early-stage ventures and social ventures and is regarded as having positive spillover effects on the economy?

Category I AIF is the correct answer. These funds invest in start-ups, early-stage ventures, social ventures, SMEs and infrastructure, which are considered to have positive spillover effects on the economy. Venture capital funds, social venture funds and angel funds fall here, unlike Category II and III funds.

  1. ACategory I AIFCorrect
  2. BCategory II AIF
  3. CCategory III AIF
  4. DCategory IV AIF

Explanation

Category I AIFs invest in start-ups, early-stage ventures, social ventures, SMEs, infrastructure and other sectors that the government or regulators consider socially or economically desirable. Category II funds such as private equity and debt funds do not take such incentives, and Category III funds use complex or leveraged trading strategies. There is no Category IV.

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