How to Select an AIF in India

Selecting an AIF in India starts with the category and strategy fit, not the brand name. Category I (venture capital, SME funds, social-impact funds), Category II (private equity, private credit, real-estate funds) and Category III (long-short, quant strategies) carry fundamentally different risk, liquidity and tax treatments under the SEBI AIF Regulations, 2012, so the selection question changes depending on which category is on the table.

Once the category fits, the actual selection work is verifying who on the team sourced and approved each investment in the cited track record, how much of the reported return came from a small number of outsized winners versus broad-based execution, and whether the fund's stated strategy matches what it has actually deployed capital into.

The common failure is selecting on brand recognition or a headline IRR figure alone. A well-known sponsor name does not guarantee the specific fund being raised has the same team, strategy or fund size as the one that produced the marketed numbers — funds change between vintages more than investors assume.

Before committing, verify: the AIF category and its specific regulatory and tax treatment; the actual deal-level attribution behind any marketed track record; whether the current team and strategy match what generated past results; and the fund's minimum ticket size (₹1 crore standard, ₹25 lakh for accredited investors and fund employees) against your own liquidity plan.

A disciplined AIF selection process treats the category and strategy as the first filter, and the manager's specific, verifiable track record as the second — never the reverse.