With respect to the Alternative Investment Funds (AIF), consider the following statements:

These are privately pooled investment funds.

These include funds covered under the SEBI (Mutual Funds) Regulations, 1996.

Hedge funds, PIPE funds are types of AIF.

Which of the statements given above are correct?

Question

Capital markets regulator Sebi has amended the rules pertaining to investment aspects of certain category of alternative investment funds (AIFs). Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs.
A hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities and derivative products to generate returns at reduced risk. As the name suggests, the fund tries to hedge risks to investor’s capital against market volatility by employing alternative investment approaches.
Private investment in public equity (PIPE) is the buying of shares of publicly traded stock at a price below the current market value (CMV) per share.
As defined in Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, AIFs refer to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP).
AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.

GKToday Admin · Accepted Answer

Only 1 & 3

Capital markets regulator Sebi has amended the rules pertaining to investment aspects of certain category of alternative investment funds (AIFs). Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs.
A hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities and derivative products to generate returns at reduced risk. As the name suggests, the fund tries to hedge risks to investor’s capital against market volatility by employing alternative investment approaches.
Private investment in public equity (PIPE) is the buying of shares of publicly traded stock at a price below the current market value (CMV) per share.
As defined in Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, AIFs refer to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP).
AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.