Question 91
Set 3
Contents
QQuestion
I. Bonds
II. Hedge Funds
III. Stocks
IV. Venture Capital
How many of the above are treated as Alternative Investment Funds?
OOptions
✓Correct Answer
DDalvoy Solutions
Among the given investment options, two are treated as Alternative Investment Funds (AIFs):
I. Bonds: No, bonds are traditional debt securities and not classified as AIFs. They are conventional investment instruments traded in regular debt markets.
II. Hedge Funds: Yes, hedge funds are classified as Alternative Investment Funds under SEBI regulations. They use complex strategies and are available to sophisticated investors.
III. Stocks: No, stocks (equity shares) are traditional investment instruments traded on stock exchanges and are not classified as AIFs.
IV. Venture Capital: Yes, venture capital funds are classified as Alternative Investment Funds, specifically under Category I AIFs as they invest in startups and emerging companies.
Therefore, only hedge funds and venture capital qualify as AIFs under Indian regulatory framework.
SUPSC Prelims Strategy and Tips
For investment classification questions, distinguish between traditional instruments (stocks, bonds) and alternative investments that involve complex strategies, higher risk, or specialized investor requirements.