Nse Indices Aif Primer March 2024

March 2024
Beyond the Basics:

Navigating the World of
Alternative Investment Funds
A Primer by NSE Indices Limited
Indices
Contents
I. Introduction
A. Background and Context 03
B. Milestones of AIF Industry in India 04
C. Growth of AIF Industry in India 05
II. Types AIFs in India 07
III. NSE AIF Benchmarking Sub-Categories 08
IV. Why choose to invest in

an Alternative Investment Fund? 09
A. Mutual Funds v/s AIFs 10
V. Investor considerations while

investing in AIFs 11
A. Comparative Analysis 12
B. Taxation (Mutual Funds Vs AIFs) 13
C. NSE Indices’ Analysis across AIF Categories 14
D. AIF Performance Analysis March 2023 17
VI. Conclusion 21
Indices
I. Introduction
>>A. Background and Context
Within the realm of traditional investments, the main distribution.

attention frequently centres on stocks and bonds. To increase the credibility and transparency of the
The idea of 'alternative investment' involves the AIF sector, the Alternative Investment Policy Advisory
choice of avenues for investing that go beyond the Committee (AIPAC) was set up, the committee
usual scope of stocks, bonds, and mutual funds. In submitted its 2nd AIPAC report to SEBI mentioning
the past few years, Alternative Investment Funds the need of benchmarking in the AIF Industry.
(AIFs) have risen to prominence as significant Further, SEBI took on record the Indian Venture and
participants in capital market and capital formation. Alternate Capital Association (IVCA) and its eligibility
Alternative Investment Funds are designed for to appoint multiple benchmarking agencies. IVCA, is
discerning investors seeking a higher level of the oldest, not for profit body in India representing
sophistication compared to traditional options like the highest number of private equity and venture
mutual funds and other mainstream investments. capital firms in India, has engaged performance
benchmarking agencies to evaluate the performance
Alternative Investment Fund (AIF) is a privately of AIFs.
pooled investment vehicle that pools funds from
investors, whether Indian or foreign and invests them The goal is to establish greater transparency,
in a variety of non-traditional or alternative assets. accountability and comparability among AIFs,
They pool funds from investors to invest in a variety of empowering investors to gauge their performance
alternative assets, including private equity, venture against established industry benchmarks. This
capital, real estate, infrastructure, commodities and strategic move is anticipated to bolster investor
may employ complex long-short strategies. confidence in the AIF sector, attracting a surge of
capital into India's alternative investment landscape.
Over the last decade, an increase in AIF industry in NSE Indices Limited is appointed by IVCA as a
India has been observed, with more investors benchmarking agency to facilitate this goal.
expressing interest in diversifying their portfolios
through alternative assets. This growth has been Making strides in this direction, NSE Indices Limited,
supported by an increased understanding of in March 2022, unveiled its debut category-level Nifty
alternative investments and the potential benefits AIF Benchmarking report covering the period up to
they can offer. March 31, 2021. Following that success, it rolled out
its first subcategory-level Nifty AIF Benchmarking
Introduced in 2012, the Securities and Exchange report for the period ending March 31, 2022, in
Board of India (SEBI), the regulatory authority for February 2023.
India’s securities markets, implemented the
Securities and Exchange Board of India (Alternative Moreover, the semi-annual report is released in
Investment Funds) Regulations. These regulations March and September, with the most recent
aimed to create a regulatory framework for AIFs, publication being the Nifty AIF Benchmarking Report
fostering transparency, safeguarding investors, and for category and sub-category levels, covering the
facilitating efficient capital pooling, investment and period ending March 2023, published in October 2023.
Indices
03
>>B. Milestones of AIF Industry in India
ANCIENT ERA Wealthy individuals and merchants

engaged in unique investment
ventures like gold.
Indian entrepreneurs and startups

sought funding to fuel their innovative 1980 – 1990s
ideas, and private equity and venture
Private Equity and Venture Capital
capital firms recognized the potential of
the Indian market.
As Indian markets opened to foreign investors, hedge

funds found opportunities to capitalize on market
inefficiencies and volatility. Real estate and infrastructure
EARLY 2000s emerged as attractive alternative investment options in
India due to the growing demand for housing,
Proliferation of Hedge Funds,
commercial spaces, and modern infrastructure. Investors
Real Estate and Infrastructure
sought exposure to commodities like gold, silver, crude
Investments, Growing Interest in
oil, and agricultural products to diversify their portfolios
Commodities
and hedge against inflation.
This move formalized the AIF industry

and provided a structured framework for 2012
different categories of AIFs, including
SEBI (Alternative Investment
venture capital funds, private equity
Funds) Regulations introduced.
funds, and hedge funds.
This report deals in detail the need for performance

benchmarking for AIFs to assist AIFs and current as well
as potential investors to analyse AIF performances with
2016 suitable benchmarks.
Alternative Investment Policy
Advisory Committee (AIPAC) submits
committee report to SEBI
The circular notified implementation of

performance benchmarking for Alternative
Investment Funds (AIFs) mandatory for all 2020 - 2021
AIFs. Pursuant to the circulars, IVCA SEBI issues circular on Disclosure
appoints NSE Indices Limited as one of the standards of AIFs and IVCA appoints
benchmarking agencies. NSE Indices Ltd as a benchmarking agency.
2022
NSE Indices Limited published first
semi-annual Category Level Report.
2023
NSE Indices Limited published ﬁrst
semi-annual Sub-Category Level Report.
2024
NSE Indices Limited published primer on
Alternative Investment Funds in India
Indices
04
>>C. Growth of AIF Industry in India
Exhibit 1: Table mentioning the growth of AIF Industry in India over 5-year and 10-year period.
Across All Categories – (In Rupees Crores)

Cumulative net
figures as at Total Commitments Total Funds Total Investments
Raised* Raised** Made***
31st March, 2013 1,437 530 361
31st March, 2018 1,65,095 85,276 61,402
31st March, 2023 8,33,774 3,65,609 3,37,983
10-year CAGR (%) 88.96% 92.25% 98.22%
5-year CAGR (%) 38.25% 33.79% 40.65%
Source: SEBI Statistics.

*Refers to commitments made by investors to AIFs. | ** Refers to funds drawn by AIFs from investors. | *** Refers to funds deployed for
investment purposes by AIFs.
The number of AIFs registered with SEBI have increased from 42 as on 31st March 2013 to 1,148 as on 13th
July 2023 which accounts for around 27 times increase in just over a decade.
Exhibit 2: Graph depicting the growth of Commitment Raised by AIFs (in INR) in India over 10-year period.
Commitment Raised (in Rupees Crores)

9,00,000 8,33,774
8,00,000
7,00,000
6,00,000
5,00,000 6,93,945
4,00,000
3,00,000 58,929
2,00,000 80,900
1,00,000
-
13
14
15
16
17
18
19
20
21
22
3
23
4
3
-1
-1
-1
-1
-1
-1
-1
-2
-2
-2
-2
p-
p-
p-
p-
p-
p-
p-
p-
p-
p-
p-
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
Se
Se
Se
Se
Se
Se
Se
Se
Se
Se
Se
M
Cat I Cat II Cat III Total
The above exhibit 2 illustrates the half yearly growth of commitments raised by Alternative Investment Funds
(AIFs) from 31st March 2013 to 31st March 2023. The total commitment amount surged remarkably,
accelerating 580-fold, starting at INR 1,437 Crores on 31st March 2013 and reaching INR 8,33,774 Crores
on 31st March 2023. Notably, Category II exhibited the most significant contribution to the total commitment
amount, followed by Category III and Category I.
Indices
05
Exhibit 3: Graph depicting the growth of Funds Raised by AIFs (in INR) in India over 10-year period.
Funds Raised (in Rupees Crores)

3,65,609
4,00,000
3,50,000
2,66,296
3,00,000
2,50,000
2,00,000
71,030
1,50,000
1,00,000 28,283
50,000
-
13
14
15
16
17
18
19
20
21
3
22
4
23
5
3
-1
-1
-1
-1
-1
-1
-1
-2
-2
-2
-2
p-
p-
p-
p-
p-
p-
p-
p-
p-
p-
p-
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
ar
Se
Se
Se
Se
Se
Se
Se
Se
Se
Se
Se
M
M
The above provided exhibit 3 depicts the half yearly progress of funds raised by AIFs spanning a decade, from
31st March 2013 to 31st March 2023. Over this period, the total funds mobilized experienced an exceptional
690-fold increase, commencing at INR 530 Crores on 31st March 2013 and culminating at INR 3,65,609
Crores on 31st March 2023. It is noteworthy that Category II emerges as the most substantial component of
the total funds raised, trailed by Category III and Category I.
Exhibit 4: Graph depicting the growth of Investments made by AIFs (in INR) in India over 10-year period.
Investment Made (in Rupees Crores)

3,37,983
4,00,000
3,50,000
3,00,000 2,42,915
2,50,000
2,00,000
1,50,000 71,055
1,00,000
50,000 24,013
-
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Sep-13
Mar-13
Sep-14
Mar-14
Sep-15
Mar-15
Sep-16
Mar-16
Sep-17
Mar-17
Sep-18
Dec-13
Mar-18
Sep-19
Dec-14
Mar-19
Sep-20
Sep-21
Dec-15
Mar-20
Dec-16
Mar-21
Sep-22
Dec-17
Mar-22
Dec-18
Mar-23
Dec-19
Dec-20
Dec-21
Dec-22
The above exhibit 4 portrays the half yearly advancement in investments made by AIFs over the period of
31st March 2013 to 31st March 2023. Impressively, the total investment amount surged by a staggering 936
times, commencing at INR 361 Crores on 31st March 2013 and surging to INR 3,37,983 Crores on 31st
March 2023. Particularly notable is the exceptional contribution of Category II to the total investment
amount, succeeded by Category III and Category I.
Indices
06
II. Types of AIFs in India
AIFs
Category I
•Funds which invest in start-up or early-stage ventures or social ventures or SMEs
or infrastructure or other sectors or areas which the government or regulators
consider as socially or economically desirable and shall include venture capital
funds, angel funds, SME funds, social venture funds, infrastructure funds, special
situation funds and such other Alternative Investment Funds.
•Funds which are generally perceived to have positive spillover effects on economy
and for which SEBI or Government of India or other regulators in India might
consider providing incentives or concessions shall be included and such funds
which are formed as trusts or companies shall be construed as “venture capital
company” or “venture capital fund” as specified under sub-section (23FB) of
Section 10 of the Income Tax Act, 1961.
Category II
•Funds which do not fall in Category I and III and which does not undertake
leverage or borrowing other than to meet day-to-day operational requirements and
as permitted in the SEBI regulations.
•Private Equity Funds or Debt Funds or Fund of funds for which no specific
incentives or concessions are given by the government, or any other Regulator are
included here.
Category III
•Funds which employ diverse or complex trading strategies and may employ
leverage including through investment in listed or unlisted derivatives.
•Funds such as hedge funds or funds which trade with a view to make short term
returns or such other funds which are open ended and for which no specific
incentives or concessions are given by the government, or any other Regulator are
included here.
Indices
07
III. NSE AIF Benchmarking Sub-Categories
Alternative
Investment
Funds
Category I Category II Category III
Venture Long Only

Capital Fund Debt Fund Equity Fund
Social Distressed Asset Long Short

Venture Fund Fund Equity Fund
Real Estate
SME Fund (Equity Oriented) Multi Asset Fund
Fund
Infrastructure Real Estate

Fund (Non Equity Oriented
and Others) Fund
Real Estate (Non

Special Equity Oriented and
Situations Fund Others) Fund -
Residential Only
Unlisted
Equity Fund
Listed + Unlisted
Please refer the annexure below
Equity Fund
for subcategory definitions.
Indices
08
IV. Why choose to invest in an Alternative Investment Fund?
Limited correlation with

traditional assets - Helps in
diversifying the portfolio
Why choose to
invest in an AIF?
Opportunity to invest in Potential for higher returns

emerging industries and especially in the long run -
disruptive technologies Focus on long term
(Startup ecosystem) investment and growth
Indices
09
A. Mutual Funds v/s AIFs
Mutual Funds Alternative Investment Funds
Pooled investment vehicles Privately pooled investment vehicles
Structure
Regulated by the Securities and Exchange Regulated by SEBI under the SEBI
Board of India (SEBI) under the SEBI (Alternative Investment Funds)
(Mutual Funds) Regulations, 1996 Regulatory Regulations, 2012
Framework
Qualified Institutional Investors (QIIs),

Open to all types of investors High Net worth Individuals (HNIs) and
Investor other sophisticated investors
Eligibility
INR 500 INR 1 Crore

Minimum
Investment
Invests in a wide range of alternative

Invests in a diversified portfolio of
assets like real estate, private equity,
stocks, bonds, hybrid, or other securities Investment hedge funds, venture capital funds, etc.
portfolio
Can be bought or sold at the fund's

Generally, have a lock-in period and
net asset value (NAV) at the end of
may have restrictions on redemption
each trading day
Liquidity
Generally considered less risky, with May involve higher risk due to
returns based on the performance of exposure to alternative assets, with
the securities in the portfolio Risks and potentially higher returns
returns
Must provide regular disclosures Have more relaxed

and reports to investors Disclosure disclosure requirements
Requirements
Standard Fee structure with Management Fees, Performance Fees

Expense Ratio and Exit loads linked to the fund’s performance
Fees
Depends on type of income Depends on the category of

and holding period AIF and nature of income
Taxation
Indices
10
V. Investor Considerations while investing in AIFs
>>A. Comparative Analysis
Particulars Category I Category II Category III
Startups, Early-Stage Debt, Real Estate, Private

Complex trading
Investment Focus ventures, Social Ventures, Equity, Distressed Debt
strategies, Derivatives
Infrastructure and Hybrid Funds
Corpus Minimum INR 20 crores
Continuing Interest At least 5% of the corpus

At least 2.5% of the corpus or INR 5 crores,
of Sponsor or INR 10 crores,
whichever is lower
whichever is lower
Type of Scheme Close Ended Close Ended Open or Close Ended
Close Ended:
Tenure Minimum 3 years Minimum 3 years Minimum 3 years
Open Ended: No tenure
Listing of close ended Permitted only after final close subject to a minimum
AIF units tradable lot of INR 1 crore
•Maximum 10% of the
NAV of the
Scheme/Investable
funds in listed equity of
an investee company and
•Maximum 25% of investable funds in an maximum 10% of
investee company directly/ indirectly investable funds (in other
than listed equity) of an
Investment
•Uninvested/ divestment proceeds pending investee company
restrictions*
distributions may be invested in liquid MFs/ directly/ indirectly
Bank Deposits/ other high quality liquid assets •Uninvested/ divestment
till their deployment proceeds pending
distributions may be
invested in liquid MFs/
Bank Deposits/ other
high quality liquid assets
till their deployment.
•Cannot borrow funds directly/ indirectly and •May borrow or engage in
shall not engage in leverage except for meeting leverage subject to
Leverage consent from the investors
temporary fund requirements for maximum 30
Restrictions and maximum limit
days, maximum 4 occasions in a year and
maximum 10% of investable funds specified by the board.
•Unlisted Equity, Listed +

•Venture Capital, SME, Unlisted Equity, Real •Long Only Equity, Long
NSE Indices’ Infrastructure, Social Estate (Equity Oriented), Short Equity and
Sub-categories Venture, and Special Real Estate (Non- Equity Multi Asset Funds
Situations Funds Oriented and Others) &
Debt Funds
Indices
11
V. Investor Considerations while investing in AIFs
>>A. Comparative Analysis
Particulars Category I Category II Category III
Trailing Returns,
Internal Rate of Return (IRR), Distribution to Paid in
NSE Indices’ Financial Year Returns,
Capital (DPI), Residual Value to Paid in Capital (RVPI),
Performance Rolling Returns,
Total Value to Paid in Capital (TVPI) and Kaplan
Analysis Metrics Compounded Annual
Schoar – Public Market Equivalent (KS-PME)
Growth Rate (CAGR)
Moderate Systematic
Higher Systematic Risk,
Lower Systematic Risk, Risk, Market and Credit
Market Volatility and
Risk Profile Higher idiosyncratic risk, Risk, Moderate Liquidity
Leverage Risk, Liquidity,
Moderate liquidity risk Risk (Depends on type of
and counterparty risk
investment)
Institutional Investors Institutional Investors Institutional Investors

(IIs), High Net worth (IIs), High Net worth (IIs), High Net worth
Investor Type
Individuals (HNIs) and Individuals (HNIs) and Individuals (HNIs) and
Family Offices (FOs) Family Offices (FOs) Family Offices (FOs)
Longer investment Depends on type of Shorter investment

Investment Horizon
horizon investment horizon
Details to investors about financial information of

Quarterly reporting to
Reporting investee company and material risks (and risk
investors, within 60 days
to investors management) at least annually, within 180 days
of end of the quarter
from the year end.
Type of Income Category I Category I Category III
Tax liability in the hands of Investor Investor AIF

Long-Term Capital Gain (Listed Shares) 10%
10%
Long-Term Capital Gain (Unlisted and Others) 20% with indexation
Taxation for Short-Term Capital Gain (Listed Shares) 15%

15%
resident Indian# Short-Term Capital Gain (Unlisted and Others) Maximum Marginal Rate
Dividend Income Maximum Marginal Rate 30%
Business Income 30%
* Does not include Large Value Funds for Accredited Investors, for whom a more relaxed set of investment restrictions apply
#Non-residents may face a different regime basis DTAAs and Income Tax Act, 1961
For CAT I and CAT II, all income sources except Business Income have a pass-through tax regime, i.e., investors are taxed in the same manner as though they directly invested
in the underlying asset.
Indices
12
>>B. Taxation (Mutual Funds Vs AIFs)
Mutual Fund Taxation in India
Equity Mutual
No. of No. ofDebt Mutual
Valuation
Tax liability in the Fund/Hybrid #Fund/Hybrid
Type of Income Schemes AIFs (INR Crores)
hands of Equity-Oriented Debt-Oriented
Mutual Fund Mutual Fund
10% (above INR Deemed as

Long-Term Capital Gain Investor 1,00,000/- without short-term capital
indexation) gain irrespective of
holding period from
Short-Term Capital Gain Investor 15% FY24 taxed at
individual slab rates
Investor
Dividend Income (MF required to deduct
TDS @10% if annual Added to Income from Other Sources and taxed
dividend amount paid to at individual slab rates
an investor exceeds INR
5,000/-)
Alternative Investment Fund Taxation for Indian Resident*
Type of Income Category I No. of No. of

Category I Valuation
Category III
Schemes AIFs# (INR Crores)
Tax liability in the hands of Investor Investor AIF
Long-Term Capital Gain (Listed Shares) 10%
10%
Long-Term Capital Gain (Unlisted and Others) 20% with indexation
Short-Term Capital Gain (Listed Shares) 15%

15%
Short-Term Capital Gain (Unlisted and Others) Maximum Marginal Rate
Dividend Income Maximum Marginal Rate 30%
Business Income 30%
*Non-residents may face a different regime basis DTAAs and Income Tax Act, 1961. For CAT I and CAT II, all income sources except Business Income have a pass-through tax
regime, i.e., investors are taxed in the same manner as though they directly invested in the underlying asset.
Indices
13
>>C. NSE Indices’ Analysis across AIF Categories
Building upon the contextual groundwork laid out in profound understanding of the performance
the preceding sections, we now shift our focus to a dynamics exhibited by various alternative investment
comprehensive analysis presented in the Nifty AIF categories at a category level and also features a host
Category Level and Sub Category level Benchmark of finely curated sub-category level indices, covering
Reports. The segment starting below offers a their performances as on March 31, 2023.
No. of No. of Valuation

Categories
Schemes AIFs# (INR Crores)
Category I 87 75 45,164
-Venture Capital Fund 66 59 32,349
-Social Venture Fund 11 6 4,686
-Infrastructure Fund 6 6 7,676
-SME Fund 4 4 453
Category II 334 250 2,55,500
-Unlisted Equity Fund 133 124 84,698
-Listed + Unlisted Fund 42 28 73,638
-Real Estate (Equity Oriented) Fund 9 9 5,587
-Real Estate (Non-Equity Oriented & Others) Fund 64 45 42,203
•Real Estate (Non-Equity Oriented & Others)
58 39 34,385
- Residential Only
-Debt Fund 69 50 41,697
-Distressed Asset Fund 17 9 7,678
Category III 206* 90 75,512
-Long Only Equity Fund 146 67 50,551
-Long Short Equity Fund 33 22 12,621
-Multi Asset Fund 25 13 11,352
Total 627 415 3,76,166
Source: NSE Indices. Data as on March 31, 2023.

Valuation represents those schemes that were active as on March 31, 2023.
*Sum of subcategory scheme counts may not equal the scheme count at category level as few schemes could not be classified into any subcategory due
to lack of adequate information.
#
Few AIFs may have schemes falling under different subcategories and hence may be included in the AIF count for all those subcategories. For this reason,
sum of AIF counts at subcategory level may not equal the AIF count at the category level.
Please refer the annexure for details of the scheme eligibility criteria and the number of schemes excluded from the calculation of benchmark metrics for
the period ended March 31, 2023.
Indices
14
Category I - Valuation breakup across subcategories as on March 31, 2023
1%
Venture Capital Fund
17%
Social Venture Fund
10%
72% Infrastructure Fund
SME Fund
Category II - Valuation breakup across subcategories as on March 31, 2023

3%
Unlisted Equity Fund
16% Listed + Unlisted Fund

33%
Real Estate (Equity Oriented) Fund
17% Real Estate (Non-Equity Oriented &
Others) Fund
Debt Fund
2% 29%
Distressed Asset Fund
Category III - Valuation breakup across subcategories as on March 31, 2023
15%
Long Only Equity Fund
17% Long Short Equity Fund
68% Multi Asset Fund
Indices
15
>>Terminologies used for performance analysis:
Vintage Year
Benchmarks for Categories I and II are calculated based on their vintage years. Vintage
year is defined as the financial year in which the scheme had its first close i.e., the vintage
year of a scheme will be FY14 if it had its first close anywhere between Apr 01, 2013, and
Mar 31, 2014.
Distribution to paid – in capital multiple (DPI)

DPI is calculated by dividing the total distributions made to investors, by the total paid-in
capital by the investors. DPI is also known as the realization multiple.
Residual Value to paid-in capital multiple (RVPI)

RVPI is calculated by dividing the residual value of all the investments remaining in the
scheme post distributions, by the total paid-in capital. The residual value refers to the
valuation of the scheme as of the date for which the benchmarks have been calculated.
Total Value to paid-in capital multiple (TVPI)

TVPI is calculated by dividing the sum of total distributions and residual value, by the total
paid-in capital. It is also known as the investment multiple. It is the sum of DPI and RVPI.
Kaplan-Schoar Public Market Equivalent (KS-PME)

The Kaplan-Schoar PME represents the market-adjusted equivalent to the traditional TVPI.
It incorporates the performance contribution of a public market index by compounding
each scheme cash flow – both capital calls and distributions – based on the public market
index performance between the date of the cash flow and the valuation date. The KS-PME
is calculated by adding the scheme’s final NAV to the distributions compounded at the
public market index return and dividing this sum by the sum of capital calls compounded at
the public market index return. The KS-PME produces a multiple that represents the
out/underperformance of the scheme relative to the public market index. If the KS-PME is
greater than 1, the scheme outperformed the public market index and vice versa.
The formula for KS-PME is given as: KS-PME=(∑FV(D)+NAV)

(∑FV(C))
Where FV(D) and FV(C) are the future value (at the final calculation date) of distributions
and capital calls respectively, compounded at the public market index CAGR, and NAV is the
valuation of the fund/scheme as on the final calculation date.
Asset-weighted Index
An asset-weighted index is created at the category level based on quarterly returns of
constituent schemes using relevant AUMs as weights.
Below is the snapshot of the performance of the categories. The entire

category/sub-category level report can be obtained by contacting us through
niftyindices.com.
Indices
16
>>D. NSE AIF Benchmark Performance - March 2023
IRR DPI RVPI TVPI

No. of
Vintage Particulars
Schemes Equal Distribution Equal Equal Equal Distribution
Pooled Pooled Pooled Pooled
Weighted Q1 Median Q3 Weighted Weighted Weighted Q1 Median Q3
CATEGORY I 5 12.06% 10.64% 18.56% 12.95% 4.75% 1.18 0.76 0.68 1.40 1.86 2.16 3.27 1.89 1.34
Venture Capital Fund 2 19.16% 19.73% - - - 0.41 0.73 3.00 2.64 3.42 3.37 - - -
Social Venture Fund 1 - - - - - - - - - - - - - -
Infrastructure Fund 2 11.74% 4.49% - - - 1.28 0.90 0.51 0.45 1.79 1.35 - - -
2
SME Fund 0 - - - - - - - - - - - - - -
0 CATEGORY II 10 8.84% 9.38% 10.94% 10.30% 6.01% 1.15 1.18 0.06 0.13 1.20 1.31 1.36 1.34 1.21
Unlisted Equity Fund 1 - - - - - - - - - - - - - -
1 Listed + Unlisted Fund 0 - - - - - - - - - - - - - -
Real Estate (EO) Fund 0 - - - - - - - - - - - - - -
4 Real Estate (NEO) Fund 5 8.64% 9.37% 15.02% 7.24% 5.60% 1.13 1.22 0.05 0.07 1.18 1.28 1.34 1.20 1.15
Real Estate (NEO) Fund -
5 8.64% 9.37% 15.02% 7.24% 5.60% 1.13 1.22 0.05 0.07 1.18 1.28 1.34 1.20 1.15
Residential Only
Debt Fund 3 10.71% 10.47% 10.64% 10.45% 10.30% 1.35 1.31 0.00 0.00 1.35 1.31 1.35 1.34 1.28
Distressed Asset Fund 1 - - - - - - - - - - - - - -
CATEGORY I 7 8.53% 10.51% 15.42% 12.04% 1.62% 1.02 1.01 0.57 1.18 1.59 2.19 2.33 1.88 1.09
Venture Capital Fund 5 7.61% 11.53% 15.14% 12.04% 2.98% 0.89 0.99 0.67 1.50 1.56 2.49 2.58 2.07 1.17
Infrastructure Fund 0 - - - - - - - - - - - - - -
2 SME Fund 1 - - - - - - - - - - - - - -
CATEGORY II 10 8.81% 9.48% 11.11% 6.42% 5.54% 0.56 0.66 0.90 0.91 1.47 1.57 1.64 1.40 1.21
0 Unlisted Equity Fund 2 10.42% 13.40% - - - 0.23 0.31 1.42 1.71 1.64 2.03 - - -
Listed + Unlisted Fund 3 11.79% 15.44% 18.01% 11.38% 10.84% 0.48 0.83 1.19 1.00 1.67 1.83 1.96 1.65 1.62
1
Real Estate (EO) Fund 2 2.42% 4.10% - - - 0.34 0.20 0.79 1.09 1.13 1.29 - - -
Real Estate (NEO) Fund 3 5.11% 4.49% 6.33% 5.75% 3.28% 1.03 1.03 0.15 0.15 1.18 1.18 1.27 1.19 1.10
5
3 5.11% 4.49% 6.33% 5.75% 3.28% 1.03 1.03 0.15 0.15 1.18 1.18 1.27 1.19 1.10
Residential Only
Debt Fund 0 - - - - - - - - - - - - - -
CATEGORY I 18 28.62% 25.28% 35.20% 26.91% 15.73% 0.46 0.50 2.93 3.00 3.39 3.50 4.34 3.13 2.04
Social Venture Fund 3 21.21% 11.94% 18.49% 5.41% 2.13% 0.26 0.25 2.11 1.94 2.37 2.18 2.79 1.20 1.08
2 SME Fund 1 - - - - - - - - - - - - - -
CATEGORY II 15 14.15% 13.54% 16.17% 13.21% 7.73% 0.76 0.86 0.95 1.03 1.71 1.90 1.91 1.45 1.26
0 Unlisted Equity Fund 4 21.55% 22.60% 32.36% 22.08% 12.32% 0.50 0.56 1.77 2.36 2.27 2.92 3.60 2.56 1.89
Listed + Unlisted Fund 1 - - - - - - - - - - - - - -
1 Real Estate (EO) Fund - - - - - - - -
0 - - - - - -
6
7 8.81% 5.75% 9.41% 6.61% 1.45% 0.66 0.73 0.72 0.54 1.39 1.27 1.41 1.29 1.06
Residential Only
Debt Fund 3 14.53% 15.21% 16.17% 15.52% 14.41% 1.46 1.43 0.18 0.14 1.64 1.57 1.73 1.69 1.47
Indices 17
IRR DPI RVPI TVPI

No. of
Vintage Particulars
CATEGORY I 10 39.78% 32.61% 49.22% 36.41% 26.34% 0.24 0.26 3.57 3.61 3.81 3.87 5.43 3.46 2.37
2
SME Fund 0 - - - - - - - - - - - - - -
0 CATEGORY II 32 13.81% 12.26% 22.26% 12.25% 6.26% 0.63 0.69 0.84 0.90 1.47 1.59 1.93 1.44 1.21
Unlisted Equity Fund 10 13.43% 17.28% 25.32% 21.51% 9.16% 0.46 0.40 1.26 1.53 1.71 1.93 2.30 1.94 1.51
1 Listed + Unlisted Fund 7 20.29% 17.83% 24.63% 22.24% 10.99% 0.40 0.57 1.46 1.19 1.86 1.76 2.09 1.86 1.50
6 12.34% 10.55% 15.29% 10.78% 8.29% 0.89 0.87 0.47 0.46 1.36 1.33 1.44 1.36 1.26
Residential Only
Debt Fund 8 5.97% 2.50% 12.20% 7.43% 5.52% 1.05 1.11 0.06 0.14 1.11 1.25 1.42 1.20 1.14
CATEGORY I 9 29.78% 24.27% 35.89% 20.58% 12.21% 0.30 0.35 1.73 1.86 2.03 2.21 2.57 1.63 1.23
Infrastructure Fund 3 19.47% 16.79% 19.09% 17.59% 14.90% 0.32 0.29 1.19 1.07 1.51 1.36 1.43 1.23 1.22
2 SME Fund 1 - - - - - - - - - - - - - -
CATEGORY II 40 17.64% 17.70% 17.92% 13.74% 11.38% 0.82 0.83 0.88 0.95 1.70 1.79 1.72 1.51 1.32
1
Real Estate (EO) Fund 3 9.87% 8.14% 9.78% 8.18% 6.53% 1.01 0.64 0.32 0.65 1.32 1.29 1.31 1.26 1.26
8
5 13.45% 9.48% 13.11% 7.99% 5.23% 0.83 0.94 0.58 0.35 1.41 1.28 1.33 1.23 1.21
Residential Only
Debt Fund 6 9.92% 10.11% 11.94% 11.50% 10.28% 1.10 1.15 0.21 0.16 1.30 1.31 1.34 1.29 1.25
Distressed Asset Fund 3 14.83% 14.53% 15.37% 14.79% 13.83% 1.00 1.03 0.42 0.40 1.42 1.43 1.46 1.39 1.38
CATEGORY I 10 41.59% 39.60% 51.65% 43.42% 26.07% 0.05 0.06 2.54 2.53 2.59 2.58 3.21 2.64 1.86
Social Venture Fund 2 42.76% 49.29% - - - 0.04 0.17 2.51 3.10 2.55 3.27 - - -
2 SME Fund 0 - - - - - - - - - - - - - -
CATEGORY II 55 23.64% 20.55% 32.67% 17.54% 9.22% 0.41 0.40 1.14 1.36 1.56 1.76 1.98 1.51 1.25
1 Real Estate (EO) Fund 1 - - - - - - - -
- - - - - -
9
10 15.12% 0.06% 15.99% 12.23% 5.70% 0.68 0.65 0.73 0.56 1.42 1.20 1.51 1.27 1.19
Residential Only
Debt Fund 8 15.77% 11.94% 17.23% 12.51% 6.54% 0.62 0.72 0.66 0.55 1.28 1.27 1.39 1.23 1.09
Indices 18
IRR DPI RVPI TVPI

No. of
Vintage Particulars
CATEGORY I 16 31.91% 27.92% 36.84% 24.40% 9.64% 0.02 0.02 1.65 1.65 1.67 1.67 2.02 1.59 1.13
Social Venture Fund 2 24.60% 8.10% - - - 0.01 0.00 1.71 1.28 1.72 1.29 - - -
2
SME Fund 0 - - - - - - - - - - - - - -
0 CATEGORY II 50 17.87% 19.18% 29.08% 15.33% 9.23% 0.38 0.33 0.92 1.05 1.31 1.38 1.54 1.26 1.15
Unlisted Equity Fund 25 27.74% 23.48% 34.67% 18.08% 13.38% 0.03 0.04 1.51 1.42 1.54 1.47 1.63 1.39 1.21
2 Listed + Unlisted Fund 1 - - - - - - - - - - - - - -
7 4.88% 11.62% 13.89% 9.11% 2.85% 0.31 0.48 0.78 0.78 1.09 1.26 1.32 1.25 1.05
Residential Only
Debt Fund 12 15.24% 16.33% 15.59% 12.75% 9.74% 0.61 0.67 0.60 0.63 1.21 1.30 1.35 1.17 1.16
CATEGORY I 5 38.70% 24.58% 38.40% 16.40% 10.42% 0.01 0.02 1.56 1.43 1.58 1.45 1.46 1.23 1.10
2 SME Fund 0 - - - - - - - - - - - - - -
CATEGORY II 36 14.95% 15.23% 24.57% 14.37% 6.79% 0.55 0.24 0.64 0.96 1.19 1.21 1.29 1.17 1.11
0 Unlisted Equity Fund 15 18.64% 15.20% 27.55% 15.19% -0.95% 0.01 0.02 1.24 1.20 1.25 1.22 1.33 1.24 0.99
Listed + Unlisted Fund 2 17.48% 20.91% - - - 0.33 0.41 0.91 0.88 1.25 1.29 - - -
2
1
4 14.13% 10.87% 15.99% 12.14% 7.02% 0.75 0.42 0.44 0.73 1.19 1.15 1.20 1.17 1.12
Residential Only
Debt Fund 9 14.94% 12.35% 14.98% 12.76% 10.66% 0.63 0.43 0.55 0.71 1.18 1.14 1.16 1.13 1.12
CATEGORY I 6 13.72% 19.78% 33.98% 16.69% 2.13% 0.01 0.01 1.11 1.19 1.12 1.20 1.22 1.12 1.02
2 SME Fund 1 - - - - - - - - - - - - - -
CATEGORY II 85 10.64% 14.58% 16.26% 9.86% -1.50% 0.12 0.08 0.98 1.06 1.10 1.14 1.15 1.08 0.99
0 Unlisted Equity Fund 40 10.20% 14.15% 21.13% 1.05% -9.15% 0.00 0.01 1.10 1.15 1.10 1.16 1.16 1.01 0.92
Listed + Unlisted Fund 10 6.73% 15.15% 7.45% 3.95% -3.74% 0.05 0.08 1.02 1.00 1.06 1.08 1.08 1.03 0.98
2 Real Estate (EO) Fund 1 - - - - - - - -
- - - - - -
2
11 17.22% 13.89% 20.99% 14.17% 12.65% 0.39 0.23 0.75 0.91 1.14 1.14 1.21 1.13 1.08
Residential Only
Debt Fund 19 10.28% 18.89% 14.33% 10.34% 9.78% 0.09 0.09 1.00 1.06 1.09 1.15 1.12 1.09 1.07
Distressed Asset Fund 3 -0.37% 4.24% 7.19% 0.08% -0.79% 0.01 0.01 0.98 1.06 1.00 1.07 1.11 1.00 0.99
Indices 19
Source: NSE Nifty AIF Sub-Category Level Report – March 2023. Data as of 31st March 2023; Returns and multiples are calculated on a
post-expense, pre-carry, and pre-tax basis.
IRR: Internal Rate of Return, DPI: Distributions to paid-in capital, RVPI: Residual Value to paid-in capital, TVPI: Total Value to paid-in capital, EO:
Equity Oriented, NEO: Non-Equity Oriented and Others.
The above table shows the vintage year wise performance highlights of Category I and Category II and their sub-category benchmarks.
Highlights of the table are as follows:
01 Category I and Category II Schemes with vintage year 2019 have outperformed schemes with other vintage years by yielding the highest
pooled IRRs of 41.59% and 23.64% respectively. In terms of value generation (TVPI), Category I schemes having vintage 2017 and category
II schemes having vintage 2016 have outperformed all other vintages by yielding TVPIs of 3.81 and 1.71 respectively.
02 In Category I, Venture Capital Funds have been the most consistent outperforming subcategory over all vintage years except 2019, whereas
in Category II, Unlisted Equity and Listed + Unlisted Equity have been the most consistent subcategories over all Vintage years except 2022.
03 While observing performances of relatively new schemes (schemes having Vintage 2022), Real Estate (Non-Equity Oriented and Others)
Schemes have outperformed all other subcategory schemes across both categories by yielding highest pooled IRRs.
04 As evident, schemes having earlier vintage years have higher DPIs as they are close to maturity. For recently launched schemes, debt funds
and real estate (Non equity oriented and others) funds have relatively higher DPIs when compared to other subcategories.
>>Category III – Trailing Returns
Category III Asset Nifty 50 TR Nifty Composite

Period
Weighted Returns Debt TR
3 Years 23.30% 27.80% 5.81%
2 Years 9.49% 9.99% 4.44%
1 Year -1.37% 0.59% 3.76%
>>Category III - Subcategory Performances

Asset Weighted Returns
Period
Long Only Equity Fund Long Short Equity Fund Multi-Asset Fund
3 Years 27.91% 16.46% 9.31%
2 Years 9.45% 10.12% 5.35%
1 Year -3.65% 4.05% 1.04%
Source: NSE Nifty AIF Category and Sub-Category Level Report – March 2023. Data as of 31st March 2023; Returns and multiples are calculated on a
post-expense, pre-carry, and pre-tax basis. TR: Total Return. Schemes used for above analysis:
Particulars Schemes Considered

Category III Aggregate Index 206
Long Only Equity 146
Long Short Equity 33
Multi – Asset Fund 25
The above table shows the performance highlights of Category III Schemes and their sub-categories based on their definitions provided below.
Over 2 years period, long short equity funds have a better performance by yielding 10.12% as compared to Long Only Equity Fund and Multi Asset
Fund which produced 9.45% and 5.35% respectively. However, Long Only Equity Funds have not just outperformed its sub-category peers by
yielding 27.91% but also the Category III Asset Weighted benchmark which has a return of 23.30% over 3 years period.
Indices
20
VI. Conclusion
Alternative Investment Funds (AIFs) investments. Among these metrics,

have gained prominence in India's Category II AIFs have exhibited a notably
investment landscape, offering swifter growth rate compared to
opportunities beyond traditional stocks Category I and III AIFs.
and bonds. AIFs pool funds from
diverse investors to invest in Investing in AIFs offers:
non-traditional assets like private > Exposure to innovative sectors and
equity, real estate, and commodities. technologies, diversifying from
traditional assets.
The Indian Venture and Alternate > Potential for superior long-term returns
Capital Association (IVCA) has
and protection against inflation,
appointed NSE Indices Limited as one
enhancing wealth preservation and
of the benchmarking agencies to
growth.
evaluate and enhance AIF performance
transparency. This initiative aims to
Mutual funds are regulated pooled
bolster investor confidence, product
investment vehicles open to all, investing
transparency and attract more capital
diversely in securities with lower risk.
into India's alternative investment
Alternative Investment Funds (AIFs) are
sector.
privately regulated pools for
sophisticated investors, involving higher
Alternative Investment Funds (AIFs) in
risk and investing in diverse alternative
India are categorized into three types:
assets like real estate and private equity.
Category I includes funds investing in
Mutual funds offer liquidity, while AIFs
socially desirable sectors like startups,
often have lock-ins. Disclosure, fees, and
infrastructure, and social ventures;
taxation differ between them.
Category II covers funds without
specific incentives, like private equity
AIFs in India: Category I targets startups,
and debt funds; Category III involves
early-stage ventures; Category II
complex trading strategies with
includes debt, real estate, private equity;
potential leverage, including hedge
Category III involves complex strategies,
funds.
derivatives. Corpus requirements,
sponsor interests, scheme type, tenure,
AIF categories are defined based on
investment limits, leverage, and
investment focus and strategy, ranging
sub-categories differ within these
from socially beneficial ventures in
categories.
Category I, general private equity, and
debt in Category II, to complex trading
There are various performance analysis
and hedge funds in Category III, each
metrics for each category of AIFs.
with distinct regulatory considerations
Category I and II target Institutional
and incentives.
Investors, Family Offices and High Net
Worth Individuals, with varying
Over the past decade, the Alternative
investment horizons. Reporting to
Investment Fund (AIF) Industry has
investors and taxation differ; Category III
witnessed substantial expansion in
has higher systematic risk, volatility, and
terms of raised commitments,
shorter investment horizons.
accumulated funds, and AIFs'
Indices
21
>>Annexure
Eligibility Criteria For Category II schemes:
All AIFs registered with SEBI under the Real Estate – Equity Oriented Fund
SEBI (Alternative Investment Funds) Schemes that have at least 90%
Regulations, 2012, are considered for exposure to real estate sector and at
the calculation of benchmarks, provided least 65% exposure to real estate
they fulfil the following criteria: equity.
Completion of one year from the first Real Estate – Non-Equity Oriented &
close of the scheme as on the date for Others Fund
which the benchmarks are calculated. Schemes that have at least 90%
For e.g., the AIF benchmark calculated exposure to real estate sector and less
for the period ending Mar 31, 2023, will than 65% exposure to real estate
have schemes that had their first close equity. Also included in this category
on or before Mar 31, 2022 are those schemes that have at least
90% exposure to real estate sector but
Valid data is provided to NSE Indices have not specified the nature of real
Ltd. in the specified format and by the estate investments – whether equity or
stipulated deadline. debt.
The following are excluded from calculation of Real Estate – Non-Equity Oriented &
benchmarks: Others – Residential Only
Schemes that are classified as Real
Any scheme that has not completed one Estate – Non-Equity Oriented & Others
year since its first close as on the date above and have at least 65% exposure
for which the benchmarks are to Residential real estate.
calculated, i.e., Mar 31, 2023
Distressed Asset Fund: Schemes that
Fund of funds have at least 65% exposure to
distressed asset.
Angel Funds registered under Category
I-AIF Debt Fund
Schemes that are not classified as Real
Any scheme that has not provided Estate above and have at least 65%
complete or valid data or that has not exposure to debt.
provided data in the required format.
Unlisted Equity Fund
Schemes having vintage of 2012 or Schemes that are not classified as Real
earlier. Estate above and have at least 90%
exposure to unlisted equity.
Subcategory Definitions
Listed + Unlisted Equity Fund
For Category I Schemes: Schemes that are not classified as Real
Category I Schemes are classified Estate and Unlisted Equity above and
purely based on their nature of have at least 65% exposure to equity
registration with Securities and (listed + unlisted).
Exchange Board of India (SEBI).
Indices
22
For Category III schemes: Long Short – Equity Fund:
Schemes not classified as Multi
Multi Asset Fund: Following Asset as per above rule and
schemes have been included having/had any short position in
under this sub-category – equity or index derivatives.
- Schemes that had/have
exposure to commodity or Long Only – Equity Fund:
currency derivatives, Schemes having more than
- Schemes that have more than -95% exposure to equity, cash
10% exposure to equity and at and cash equivalents and mutual
least some exposure to debt, fund units, And,
- Schemes that have more than -No short position in equity or
10% exposure to debt and at least index derivatives.
some exposure to equity,
Indices
23
>>About NSE Indices Limited:
NSE Indices Limited (formerly known as India Index income indices based on Government of India
Services & Products Ltd. - IISL), a subsidiary of NSE, securities, corporate bonds, money market
provides a variety of indices and index related instruments and hybrid indices. Many investment
services for the capital markets. The company products based on Nifty indices have been
focuses on the index as a core product. The company developed within India and abroad. These include
owns and manages a portfolio of indices under the index-based derivatives traded on NSE and NSE
Nifty brand of NSE, including the flagship index, the International Exchange IFSC Limited (NSE IX) and a
Nifty 50. Nifty equity indices comprise of number of index funds and exchange traded funds.
broad-based benchmark indices, sectoral indices, The flagship 'Nifty 50' index is widely tracked and
strategy indices, thematic indices, and customised traded as the benchmark for Indian Capital Markets.
indices. NSE Indices Limited also maintains fixed
For more information, please visit: www.niftyindices.com
Analytical Contact Details

Aman Singhania, CFA, FRM
Vice President and Head – Products (NSE- Indices)
+91-22-26598248
[email protected]
Disclaimer: All information contained herewith is provided for reference purpose only. NSE Indices Limited
(formerly known as India Index Services & Products Limited-IISL) ensures accuracy and reliability of the above
information to the best of its endeavours. However, NSE makes no warranty or representation as to the accuracy,
completeness or reliability of any of the information contained herein and disclaim any and all liability
whatsoever to any person for any damage or loss of any nature arising from or as a result of reliance on any of the
information provided herein. The information contained in this document is not intended to provide any
professional advice.
Contact:
Email: [email protected]
Tel: +91 22 26598100 (Ext No: 24793)
Address: Exchange Plaza, Bandra Kurla Complex,
Bandra (East), Mumbai– 400 051(India)
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Nse Indices Aif Primer March 2024

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March 2024

Beyond the Basics:

B. Milestones of AIF Industry in India 04

C. Growth of AIF Industry in India 05

II. Types AIFs in India 07

III. NSE AIF Benchmarking Sub-Categories 08

IV. Why choose to invest in

A. Mutual Funds v/s AIFs 10

V. Investor considerations while

B. Taxation (Mutual Funds Vs AIFs) 13

C. NSE Indices’ Analysis across AIF Categories 14

D. AIF Performance Analysis March 2023 17

Within the realm of traditional investments, the main distribution.

ANCIENT ERA Wealthy individuals and merchants

Indian entrepreneurs and startups

As Indian markets opened to foreign investors, hedge

This move formalized the AIF industry

This report deals in detail the need for performance

The circular notified implementation of

Across All Categories – (In Rupees Crores)

Source: SEBI Statistics.

Commitment Raised (in Rupees Crores)

Cat I Cat II Cat III Total

Source: SEBI Statistics.

Funds Raised (in Rupees Crores)

Source: SEBI Statistics.

Investment Made (in Rupees Crores)

Cat I Cat II Cat III Total

Source: SEBI Statistics.

Category I Category II Category III

Venture Long Only

Social Distressed Asset Long Short

Infrastructure Real Estate

Real Estate (Non

Limited correlation with

Opportunity to invest in Potential for higher returns

Mutual Funds Alternative Investment Funds

Pooled investment vehicles Privately pooled investment vehicles

Qualified Institutional Investors (QIIs),

INR 500 INR 1 Crore

Invests in a wide range of alternative

Can be bought or sold at the fund's

Must provide regular disclosures Have more relaxed

Standard Fee structure with Management Fees, Performance Fees

Depends on type of income Depends on the category of

Particulars Category I Category II Category III

Startups, Early-Stage Debt, Real Estate, Private

Corpus Minimum INR 20 crores

Continuing Interest At least 5% of the corpus

Type of Scheme Close Ended Close Ended Open or Close Ended

•Unlisted Equity, Listed +

Particulars Category I Category II Category III

Institutional Investors Institutional Investors Institutional Investors

Longer investment Depends on type of Shorter investment

Details to investors about financial information of

Type of Income Category I Category I Category III

Tax liability in the hands of Investor Investor AIF

Taxation for Short-Term Capital Gain (Listed Shares) 15%

Dividend Income Maximum Marginal Rate 30%

Business Income 30%