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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 III AIF?

A hedge fund using diverse or complex trading strategies is a Category III AIF. Category III funds may use leverage and derivatives, whereas venture capital, social venture and infrastructure funds are classified as Category I AIFs because they invest in socially or economically desirable sectors.

  1. AVenture capital fund investing in start-ups
  2. BSocial venture fund
  3. CHedge fund employing diverse or complex trading strategiesCorrect
  4. DInfrastructure fund

Explanation

Category III AIFs employ diverse or complex trading strategies and may use leverage, including investment in listed or unlisted derivatives. Hedge funds fall here. Venture capital, social venture and infrastructure funds are Category I AIFs.

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