Which categories of Alternative Investment Funds (AIF) are available for the investors to make investment ? Explain.

Different types of Alternative Investment Funds There are three categories of Alternative Investments Funds available for investors to make investment and the same are elaborated hereunder: Category I Alternative Investment Fund are those which invest in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, social venture funds, infrastructure funds, special situation funds and such other Alternative Investment Funds as may be specified. Alternative Investment Funds which are generally perceived to have a positive spillover effect on the economy and for which SEBI or Government of India or other regulators in India might consider providing incentives or concessions shall be included and such funds which are formed as trusts or companies shall be construed as 'venture capital company' or 'venture capital fund' as specified under sub-section (23FB) of Section 10 of the Income Tax Act, 1961. Category II Alternative Investment Fund are those which does not fall in Category I and III and which does not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI AIF Regulations. Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator shall be included under this category. Category III Alternative Investment Fund which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Alternative Investment Funds such as hedge funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator shall be included in this category.