What do you understand by alternative investment fund? How they are different from mutual funds?

SEBI (Alternative Investment Funds) Regulations, 2012 provides that an Alternative Investment Fund (AIF) means any fund established in India in the form of a trust, company, limited liability partnership or a body corporate which:- is a privately pooled investment vehicle that collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors; and is not covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of SEBI, which aims to regulate fund management activities. However, SEBI (Alternative Investment Funds) Regulations, 2012 provides the list of funds which are excluded from the definition subject to certain conditions. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. Mutual Funds in India are governed by the SEBI (Mutual Fund) Regulations 1996 as amended from time to time. Difference: The key difference lies in their regulatory framework and nature of pooling. AIFs are privately pooled investment vehicles not covered by Mutual Fund Regulations, typically investing in less liquid or alternative assets, and cater to sophisticated investors. Mutual Funds are publicly pooled investment vehicles, highly regulated by SEBI (Mutual Fund) Regulations, 1996, investing in traditional capital market instruments, and cater to a broader investor base.