NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Which statement about Alternative Investment Funds (AIFs) in India is correct?
Category III AIFs may use complex, diversified or leveraged trading strategies, such as hedge-fund style approaches. AIFs are regulated by SEBI, not RBI, and they carry a minimum investment size, so they are not open to unlimited small retail participation.
- AAIFs are regulated by RBI under the Banking Regulation Act
- BCategory III AIFs may employ complex or leveraged trading strategiesCorrect
- CCategory I AIFs are open to only foreign investors
- DAIFs can accept investments from any number of retail investors with no minimum ticket
Explanation
AIFs are regulated by SEBI under the AIF Regulations, 2012. Category III AIFs, such as hedge funds, employ diverse or complex strategies including leverage and derivatives. Category I invests in socially or economically desirable sectors such as start-ups and infrastructure, and AIFs have a minimum investment amount.
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