With reference to investments, consider the following:
- I. Bonds
- II. Hedge Funds
- III. Stocks
- IV. Venture Capital
How many of the above are treated as Alternative Investment Funds?
- aOnly one
- bOnly two
- cOnly three
- dAll the four
See the answer and explanationWith how to crack it
Answer: (b) Only two
SEBI's Alternative Investment Funds Regulations, 2012 define an AIF as a privately pooled fund, and sort AIFs into three categories: Category I includes venture capital funds, and Category III includes hedge funds.
Bonds and stocks are ordinary securities, not pooled investment funds, so they are not AIFs. Only hedge funds and venture capital are, answer (b).
Ask what an AIF is: a privately pooled fund. Bonds and stocks are single securities, not pools, so strike them out at once and count what is left.