AIF Categories I, II, III – Which One is Right for You?

Introduction
SEBI divides AIFs into three categories based on their investment strategy. Each category suits different investor needs.

Category I AIFs

• Invest in socially/economically beneficial sectors (VC, SME, infra).
• Long-term growth, aligned with national priorities.

Category II AIFs

• Private equity, debt, distressed assets.
• Popular among HNIs and family offices.

Category III AIFs

• Hedge fund-like, use leverage, derivatives.
• Higher risk, higher complexity.

Which to Choose?

• Conservative HNIs → Category I or II.
• Aggressive investors → Category III.
• Many use a mix for balance.

Key Takeaway

• Category I = Developmental + Growth.
• Category II = Private Equity/Structured Debt.
• Category III = Aggressive hedge strategies.

Disclaimer
This blog is for educational purposes only and does not constitute investment advice. Past performance may or may not be sustained in the future. Investments in AIFs and PMS are subject to market risks. Please consult your SEBI-registered investment advisor before investing.