Alternative Investments (Hedge Funds, Private Equity, Venture Capital) are using pooled funds that employ different strategies to earn active returns, for their investors. Alternative Investments Firms may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high yield. it is important to note that Alternative Investments are generally only accessible to Accredited Investors (worldwide) as they require Securities Authority (ISA – Israeli, SEC – USA and more) Regulations, in every country, there are different regulations, in India, there are SEBI regulations.
One aspect that has set the Alternative Investments industry apart is the fact that Alternative Investments funds face less regulation than mutual funds and other investment vehicles.
- In India according to SEBI regulations under Category of Alternate Investment Funds (AIF).
- Not everyone is allowed to invest in any Alternative Investment. Only Accredited Investors are allowed to invest.
- Alternative Investments are strictly regulated because they can literally use any strategy.
- SEBI wants to play safe by having such regulations for Alternative Investments, that only Accredited Investors with knowledge in finance and risk management can take consultants and more.