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 categories of AIF is permitted to employ diverse or complex trading strategies and may use leverage?
Category III AIFs are permitted to use diverse or complex trading strategies and may employ leverage, subject to SEBI limits. Category I and II funds are not meant for such strategies and generally cannot borrow except for limited operational needs.
- ACategory I AIF
- BCategory II AIF
- CCategory III AIFCorrect
- DVenture Capital Fund under Category I
Explanation
Category III AIFs, such as hedge funds, trade with diverse or complex strategies and may employ leverage, subject to regulations. Category I funds invest in socially or economically desirable sectors, and Category II funds generally do not use leverage other than to meet day-to-day operational requirements.
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