I. Bonds

II. Hedge Funds

III. Stocks

IV. Venture Capital

How many of the above are treated as Alternative Investment Funds?

(a) Only one

(b) Only two

(c) Only three

(d) All

Ans-b

Explanation

Alternate Investment Fund (“AIF”)

Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. 

Alternative Investment Funds can be of different types based on their investment strategy and types of assets under management

Venture Capital Fund (VCF) 

VCF means “an AIF which invests primarily in unlisted securities of start-ups, emerging or early-stage venture capital undertakings mainly involved in new products, new services, technology or intellectual property right based activities or a new business model and shall include an angel fund.

Angel Fund 

Angel Fund means “a sub-category of Venture Capital Fund under Category I AIF that raises funds from angel investors and invests in accordance with the SEBI (AIF) Regulations

Private Equity Fund

Private Equity Fund PE Fund means “an AIF which invests primarily in equity or equity linked instruments or partnership interests of investee companies according to the stated objective of the fund.

Special Situation Fund 

Special Situation Fund means a Category I AIF that invests in special situation assets in accordance with its investment objectives and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016

Debt Fund Debt

Debt Fund Debt Fund means “an AIF which invests primarily in debt securities of listed or unlisted investee companies or in securitised debt instruments according to the stated objectives of the Fund

Infrastructure Fund 

Infrastructure Fund means “an AIF which invests primarily in unlisted securities or partnership interest or listed debt or securitised debt instruments of investee companies or special purpose vehicles engaged in or formed for the purpose of operating, developing or holding infrastructure projects 

SME Fund 

SME Fund means “an AIF which invests primarily in unlisted securities of investee companies which are SMEs or securities of those SMEs which are listed or proposed to be listed on a SME exchange or SME segment of an exchange

Hedge Fund 

Hedge Fund means “an AIF which employs diverse or complex trading strategies and invests and trades in securities having diverse risks or complex products including listed and unlisted derivatives”. 

Social Venture Fund 

Social Venture Fund means “an AIF which invests primarily in securities or units of social ventures and which satisfies social performance norms laid down by the fund and whose investors may agree to receive restricted or muted returns”. 

Social venture is a trust or society or company or venture capital undertaking or limited liability partnership formed with the purpose of promoting social welfare or solving social problems or providing social benefits. 

Hence 2 and 4 are correct

Bond 

A bond is a contract between the borrower (the issuer) and the lender (the investor). In other words, a bond allows a company to raise money from a large number of investors by breaking up the total amount borrowed into small, equal components. Investors can subscribe to these bonds as per their investible surplus.

Stocks

Stocks/Shares represent part-ownership in a business. Each shareholder holds ownership commensurate with the number of shares held in a company out of the total issued shares.

Stocks are financial securities representing ownership in companies , Stocks of company gets divided into shares i.e . a unit  of stock is share.

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