What should an investor verify first?

SEBI AIF registration number and category, confirmed directly rather than taken from a marketing deck.

Which documents matter most?

The Private Placement Memorandum, for fee structure, hurdle rate, waterfall and lock-in terms.

What is the main downside to test?

Running the checklist as a formality after the decision is already made emotionally, rather than as a real input.

How should the final decision be made?

Only after a written downside case shows the commitment survives the fund's worst historical drawdown repeating.

Back to JournalFund Manager Selection and Due Diligence

AIF Due-Diligence Checklist Before Investing ₹1 Crore

Urvashi L1 min read

Understanding the Manager Decision

A ₹1 crore AIF commitment is usually a meaningful fraction of an individual investor's liquid net worth, which justifies a structured checklist rather than an informal conversation with a relationship manager. The checklist should span regulatory status, team, strategy, terms and downside case, in that order.

Reading Evidence and Attribution

Regulatory status: confirm SEBI AIF registration number and category. Team: identify who actually sources and approves deals, and their tenure at the firm. Strategy: confirm the fund's stated mandate matches its actual portfolio composition. Terms: read the fee structure, hurdle rate, waterfall and lock-in directly from the PPM, not a summary deck.

Where Manager Diligence Breaks

The common failure is treating the checklist as a formality completed after the decision is emotionally made, rather than as the actual decision-making input. A checklist run after committing psychologically cannot change the outcome, however thorough it looks on paper.

Making the Selection Decision

Before committing ₹1 crore, work through: SEBI registration and category confirmation; verified team attribution for the cited track record; a side-by-side of stated mandate versus actual portfolio; full fee and waterfall terms read from the PPM; and a written downside case — what happens to this capital if the fund's worst historical drawdown repeats.

The checklist has done its job only if it is capable of stopping the investment, not merely confirming a decision already made.

Key takeaways

Run the checklist before the decision is emotionally made, not after, or it cannot actually change the outcome.
Confirm SEBI registration, category, team attribution, and actual portfolio versus stated mandate.
Read fee structure, hurdle rate, waterfall and lock-in directly from the PPM, not a summary deck.
Write a downside case: what happens if the fund's worst historical drawdown repeats.

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