India AIF

How to choose an AIF — a diligence framework, and why there is no ranked list

Which is the best AIF in India?

No source can answer that, including this one. Indian Alternative Investment Funds do not publish comparable performance, so no honest ranking of them exists. Any list of the best AIFs has been assembled from self-reported figures that nobody is obliged to publish, standardise or verify. What can be done is structured diligence on category, manager, terms and disclosure.

Start with the thing nobody says

There is no credible ranking of Indian AIFs, and this site is not going to publish one.

Ranking funds requires comparable performance data. For portfolio management services that data exists, because APMI mandates monthly disclosure on a common basis. For Alternative Investment Funds it does not exist at all. Returns sit in the private placement memorandum and in reports to existing investors. Neither is public. There is no mandated format, no mandated frequency, and no central source that collects them.

So any page titled "best AIFs in India" has been built one of two ways. Either it ranks funds on numbers the funds themselves supplied, which nobody is obliged to publish, standardise or verify. Or it ranks them on nothing at all and calls the result a list.

The reasoning in full is at why AIF performance is not public, and the comparison with PMS is at AIF vs PMS.

What follows is what can be done instead. It is a framework for structured questions, not a recommendation of any fund, and nothing on this page is investment advice.

1. Category fit, first and cheaply

The category is a public fact and it narrows the field before you spend time on anything else.

  • Category I — venture capital, angel, SME, social impact, infrastructure. Close-ended, no leverage, long horizons, and returns that depend on exits that may not arrive on schedule.
  • Category II — private equity, private credit, real estate, funds of funds. Close-ended. The largest category by a wide margin, and the least informative label, because it is defined by exclusion.
  • Category III — complex or diverse trading strategies. May be open-ended and may use leverage within SEBI's limits, which changes the risk profile and the tax treatment both.

Category also sets liquidity. Category I and II funds are close-ended: you are committing capital for the fund's tenure and there is no redemption window because the underlying assets cannot be sold on demand. If you need the money back on a date you choose, the answer is not an AIF.

2. Verify the registration yourself

Check the fund against SEBI's register rather than against a pitch deck. Every SEBI-registered AIF is in the directory on this site, with its registration number, category, registration date and manager, reproduced from SEBI's own published register.

What that confirms: the fund exists, it is registered, and it is in the category it claims. What it does not confirm: anything about the fund's quality, conduct or results. Registration is not an endorsement and SEBI does not say it is.

If a fund cannot be found in the register under the name it is being sold to you under, that is worth resolving before anything else.

3. The manager, from sources you can check

The manager is the investment. In a close-ended fund holding unlisted assets, almost everything that will determine the outcome is a decision the manager has not made yet.

Questions with verifiable answers:

  • Which prior funds has this team raised, and under what entity? Prior funds from the same manager are in the register. Other funds sharing a sponsor are grouped on this site's manager pages.
  • Who actually ran them? Track records travel with people, not with firm names. Ask which named individuals made the investments being cited and whether those people are still at the firm and on this fund.
  • What has been realised, as opposed to marked? An unrealised mark is the manager's own estimate of what something is worth. A realised exit has a buyer, a price and a date. Ask for the distinction explicitly.
  • What is the fund's first close status and who else has committed? Ask who the anchor investors are.

Where a manager cites past performance to you, ask in writing what it is calculated on, over what period, gross or net of fees, and whether it is realised. You are not going to be able to check it against a public source, which is exactly why the question has to be asked and the answer has to be in writing.

4. Fees, in writing, all of them

Fees are negotiated and they vary. There is no standard AIF fee schedule, so "two and twenty" is a starting assumption, not a fact about any particular fund.

Ask for each of these as a number, in the fund documents rather than in an email:

  • Management fee, and on what base — committed capital or invested capital. The difference is large over a ten-year fund.
  • Carried interest, the percentage and who receives it.
  • Hurdle rate, and whether there is a catch-up. A hurdle with a full catch-up is a very different arrangement from a hurdle without one.
  • Setup and placement costs, and whether they are borne by the fund or the manager.
  • Operating expenses, and whether there is a cap.
  • Distributor commission, and how it is being paid. Since 1 May 2023 the rules on this changed materially — see AIF distributor commission. A direct plan is mandatory and it is cheaper. Ask whether you are being offered one.

5. Lock-in, tenure and drawdown mechanics

You are not writing one cheque. In most Category I and II funds you make a capital commitment and the manager draws it down over the investment period, on notice, at times you do not control.

  • What is the stated tenure, and on what terms can it be extended? Extension generally requires investor consent, and it is common.
  • What is the drawdown schedule, and what is the notice period?
  • What happens if you fail to meet a drawdown call? Default provisions in private funds can be severe, up to forfeiture of a portion of what you have already contributed. Read this clause specifically.
  • Is there any transfer or secondary provision, and does it require the manager's consent?

6. What the PPM must disclose

Every AIF issues a private placement memorandum. SEBI prescribes a template for most funds and requires filing through a merchant banker. It is not a public document, so this is a document you receive rather than one you can look up.

The sections to read closely are the ones people skip:

  • Conflicts of interest and related-party transactions. Whether the fund may transact with other funds or entities the manager controls, and on what terms.
  • The tax section, which is specific to how the fund is constituted.
  • Valuation policy — who values unlisted holdings, how often, and whether the valuer is independent.
  • Key person provisions. What happens if the named individuals leave.
  • Risk factors, read as a list of what the manager's lawyers thought was material enough to write down.

The questions to ask before signing

Compressed into a list you can take into a meeting:

  1. Is the fund registered, in which category, and under exactly which name?
  2. Which prior funds did this team run, and which named individuals ran them?
  3. What has been realised, with dates, as against marked?
  4. Management fee on committed or invested capital?
  5. Hurdle, catch-up and carry, as numbers?
  6. Am I being offered the direct plan, and what does the distributor receive?
  7. What is the tenure, and on what terms can it extend?
  8. What is the drawdown schedule and what happens if I miss a call?
  9. Who values the unlisted holdings, and are they independent?
  10. What are the key person provisions?
  11. What related-party transactions does the PPM permit?
  12. What is the total expense the fund can charge me, capped or uncapped?

None of these requires performance data. All of them have answers a manager can give in writing, and a manager's willingness to put them in writing is itself information.

Where to look next

This page is information about how to structure diligence. It is not investment advice, not an offer, and not a recommendation of any fund.

Related

Checked against source on 24 August 2026. This page is information, not legal, tax or investment advice.

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