Alternative Investment Funds (AIF)
Access beyond public markets.
Alternative Investment Funds are privately pooled vehicles that invest in areas typically unavailable through conventional products, such as private equity, venture capital, private credit, real estate and hedge-fund-style strategies. They can add diversification but come with longer lock-ins and higher complexity.
Categories at a glance
Category I
Venture capital, social impact, infrastructure and SME funds.
Category II
Private equity, private credit and real-estate funds; typically closed-ended.
Category III
Strategies using complex or traded instruments, including long-short funds.
How it generally works
- Investors commit capital to a fund, which is often drawn down in stages (capital calls) as the manager finds opportunities.
- The fund invests according to the strategy set out in its private placement memorandum.
- Distributions are made as investments are realised, typically over several years.
Who may find it suitable
Experienced investors with substantial portfolios, a long horizon and the ability to hold illiquid investments.
Key considerations and risks: AIFs
- Capital may be locked in for several years with limited or no early exit.
- Valuations of private holdings are periodic and can be subjective.
- Fees, hurdle rates and carried interest need careful comparison.
How we select managers
We look past headline numbers to the things that tend to matter over time: a clearly articulated and consistently applied process, the depth and stability of the team, risk management, alignment of interests, total cost and transparency of reporting. We never select on past returns alone.
How ArthaVan can assist
- Deciding whether, and how much, alternative exposure suits you
- Evaluating managers, strategy, track record, fees and liquidity terms
- Reviewing the private placement memorandum with you
- Tracking capital calls, distributions and reporting
Frequently asked questions about AIFs
Can I exit an AIF early?
Usually not. Category I and II funds are typically closed-ended with defined tenures. Category III funds may offer periodic liquidity, depending on the fund’s terms.
What is a capital call?
Many AIFs do not invest your full commitment at once. They “call” portions of it as investments are made, so you should keep the committed amount available.
Discuss alternative investments.
Start with a private, no-obligation conversation about where you are and where you want your wealth to go.