This comprehensive guide discusses the intricacies of Alternative Investment Funds (AIFs) in India, offering:

• Foundational understanding of the investment landscape

• Alternative asset classes

• Role and functions of key stakeholders within the AIF ecosystem

The key learning outcomes of the book are as follows:

• Equip readers with a basic understanding of the diverse investment landscape and the nuances of alternative asset classes

• Foster a deep comprehension of the key theories underpinning investment decisions and fund management

• Enable thorough knowledge of managing AIFs, focusing on product suitability, ecosystem roles, fund governance, and strategic investment approaches

• Enable the readers to understand the complex regulatory and taxation landscape affecting AIFs in India, promoting best practices in fund management and compliance

This book is designed for AIF Managers, investment team members, finance professionals, and anyone interested in deepening their understanding of alternative investment funds management in India.

The Present Publication is the December 2023 workbook version, published exclusively by Taxmann for NISM Certification Examination XIX-C | Alternative Investment Funds Managers, with the following noteworthy features:

• [Foundation of Investment] Introduces the investment landscape, distinguishing between traditional and alternative investments, and elucidates the basics of portfolio theory

• [AIF in India] Offers an in-depth analysis of AIFs in India, including their evolution, regulatory environment, and the suitability of various AIF products for portfolio diversification

• [Fund Management] Discusses the critical role of investment managers and their teams in fund management duties, emphasising governance, conflict of interest management, and the importance of a robust governance structure

• [Valuation and Performance] Explains valuation techniques, investment strategies, and the process of performance evaluation, including benchmarking policies

• [Regulatory and Taxation Aspects] Covers the essential regulatory framework and taxation aspects relevant to AIFs in India, ensuring compliance and understanding of legal obligations

The detailed contents of the book are as follows:

• Investment Landscape

o Introduction to various investment types and their distinctions from speculation

o Discussion on investment objectives and the process of estimating the required rate of return

• Types of Investments

o Comparison between traditional and alternative investments, including their types and roles in portfolio management

o Examination of the channels for making investments and the historical growth of alternative investments

• Concept of Informational Efficiency

o Exploration of informational versus operational efficiency, efficient capital markets, and the Random Walk Theory

o Analysis of the Efficient Market Hypotheses (EMH), market anomalies, and their implications on valuation and portfolio management

• Introduction to Modern Portfolio Theory

o Detailed framework for constructing portfolios, assumptions of the theory, and the definition of investor risk profiles

o Discussion on expected rates of return, variance, portfolio optimisation, and the Efficient Frontier

• Introduction to Capital Market Theory

o Overview of Capital Market Theory, its assumptions, the Capital Market Line, and the diversification of risk

o Insights into CAPM, empirical tests, and multi-factor models of risk and return

• Alternative Investment Funds in India and its Suitability

o Detailed analysis of the evolution, growth, and current market of AIFs in India

o Comparison of AIFs with traditional investments and their role in portfolio diversification and risk management

• Alternative Investment Fund Ecosystem

o Comprehensive understanding of the concepts prevalent in the AIF industry

• Alternative Investment Fund Structuring

o Insights into the principle of 'Pooling', buy-out transactions, AIF constitution, and common fund structures

• Fee Structure and Fund Performance

o Examination of management fees, hurdle rate, high-water mark, types of risks, risk measures, and return measures in AIFs

• Indices and Benchmarking

o Detailed exploration of indices, their uses, methodologies, and performance benchmarking

• Investment Strategies, Investment Process and Governance of Funds

o Insight into investment strategies, deal sourcing, investor due diligence, and governance structures in AIFs

• Funds Due Diligence | Investor Perspective

o Comprehensive guide to fund due diligence, manager evaluation, and selection from an investor's perspective

• Legal Documentation and Negotiations

o Overview of essential legal documents and negotiations in the AIF landscape

• Valuation

o Detailed discussion on valuation basics, approaches, and techniques for AIF portfolio investments

• Fund Monitoring, Reporting and Exit

o Insights into the regulatory framework for fund monitoring, reporting, exit options, and liquidation schemes

• Taxation

o Detailed examination of taxation related to AIFs, including surcharge rates, GAAR, and other applicable taxes

• Regulatory Framework

o Comprehensive overview of the regulatory framework governing AIFs, including SEBI regulations and other related laws