List of alternative investments in india

List of alternative investments in India In the volatile scenario markets are experiencing in the past few months, investors are often advised to diversify their investments to spread their overall market risks. Alternative investment funds (AIF) provide you with the perfect choice for diversifying your portfolio while optimizing your returns.

An asset type that is not conventional in nature such as stocks and bonds, an alternative investmentoffers ample opportunity to Institutional Investors andHigh Net worth Individuals (HNIs) to build a strong and well-diversified portfolio. Moreover, lower correlation compared with all the standard asset classes makes alternative investments a lucrative investment strategy.

Some of the most popular alternative investment options in Indian include private equity funds, venture capital funds, debt funds, and real estate funds. Let’s examine these options in more detail.

Private equity funds Private equity (PE) funds are formed by PE firms through a general partnership.PE funds invest largely in private companies with high growth prospects. A PE fund’s investment criteria could be general (investing in various industries) or specific (investing in specific industries).

Moreover, these funds tend to stayinvestedfor around 12 years. A PE fund is closed once this period expiresand thefunds are distributed back to all the limited partners. Positive Venture capital funds Venture capital (VC) funds are those that manage the money of investors who are primarily looking at taking up private equity stake in startups and/orSMEs, which possess strong growth prospects. VC funds provide budding entrepreneurs and SMEs with equity financing,giving them the ability to raise funds at crucial junctures of their business journey. VC funds are popularly characterized as ‘high-risk/high-return’investments.

Portfolio returns of a VC fund generally resemble a ‘barbell approach’ to investing. Most VC funds hedge small bets on numerous young startups. They do this with a strong belief that at least one of them will achieve high growth, rewarding the fund with a large payout at the termend. This provides the VC fund with the all-important cushion against the risksassociated with the other non-performing investments. Thus, the fund can mitigate investment risks effectively.

Debt funds A debt fund generally refers to pool of investmentsthat include mutual fundsand/or exchangetraded funds, which have fixed income investments as their core holding. The options in which

A debt fund can invest in the short term or longterm include money market instruments, securitized debt instruments, bonds, and floating rate debt. Capital protection, capital preservation, and income generation are the three main objectives of investing your money in a debt fund. Absolute returns gain preference over performance benchmarks while investing in debt funds, making them a much safer investment option.

Real estate funds Real estate funds or private equity (PE) real estate funds generally refer to an asset class that comprisesa lucrative blend of debt and equity investment in the real estate markets. Multiple investors can pool in their money in a real estate PE fund. The major pre-requisites for investing money in a PE real estate fund include long-term investment horizon, active management strategy, and strongcommitment of initial capital. These aspects hold the key for both the investor as well as the fund in terms of providing vital investment opportunities in real estate.

Real estate isa highly popular asset class in India that generally provides investors with high potential in terms of ROI coupled with good price appreciation of properties.

PE real estate funds are different from REITs majorly becausethey are not linked to the stock market, which keeps them away from routine market fluctuations. This is reflected from the fact that their value does not increase or decreaseowingtocrests and troughs of the stock market or events that have no connection with basic real estate fundamentals. Therefore, PE real estate funds would help you largely in diversifying your overallinvestment portfolio whileensuring that you balance your risks more effectively. The best part about a PE reals estate fund is that the fund treats each property a different business entity.Thus; underperformance of one property does not have ahuge impact on the other one or the fund’s performance.

To know more about Alternative Investment Fund (AIF) options and investment planning, call us on 91-22-28577647. Or write to us at http://www.altsmart.in/