Alternative investment funds and innovative opportunities for investors

livemint.com:

₹1 crore minimum investment requirement is an entry hurdle, attracting only sophisticated investors looking for a bespoke investment strategy. Over the previous seven years, the AIF category in India has increased tenfold, with assets under administration totalling ₹7 trillion, according to the Indian Association of Alternative Investment Funds (IAAIF). These investments often have a 10-year time horizon, necessitating financial advisors’ continuous engagement with investors to manage expectations.

Almost a decade ago, foreign institutional investors (FIIs) were financing India’s AIFs. However, there has been an ever-expanding pool of domestic investors that is now contributing to the industry’s growth. Compared to a decade ago, when overseas investors infused majority of the capital, almost 80-90% of funds raised today are from domestic investors.

Current trends indicate that AIFs could become a huge industry in the future and get close to the size of India’s ₹46-trillion mutual fund industry. AIFs encompass a spectrum of categories, each offering distinctive investment opportunities. Interestingly, each category can further evolve and offer more specialized investment opportunities to investors with the help of innovation.

Here is how. Real estate funds: Real estate funds offer a gateway to property markets without direct ownership. In an era of digital transformation, these funds are capitalizing on property technology (PropTech) for property management, virtual property tours, and data-driven location analysis.