Alternative Investment Funds (AIFs) are privately pooled investment vehicles that collect funds from investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of their investors. Unlike traditional investment options such as mutual funds, AIFs typically invest in asset classes such as private equity, hedge funds, venture capital, infrastructure, and structured credit products. In India, AIFs are regulated by the Securities and Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds) Regulations, 2012. These funds are categorized into three broad classes—Category I (which includes funds investing in start-ups, SMEs, infrastructure, etc.), Category II (which includes private equity funds and debt funds), and Category III (which includes hedge funds and other complex strategies). AIFs are primarily targeted at high-net-worth individuals (HNIs) and institutional investors due to their higher investment threshold and risk-return profiles. With the increasing maturity of Indian capital markets and investor appetite for diversified portfolios, AIFs have gained traction as a sophisticated investment avenue offering tailored strategies and exposure to non-traditional asset classes.