AIF investments rise 32% to ₹5.38 trillion by March 2025, shows data

Rising volatility and evolving macro trends are driving HNIs to invest more in AIFs, which reached ₹5.38 trillion by March 2025, as they move beyond traditional asset classes

Investments in Alternative Investment Funds (AIFs) by India’s high net-worth individuals (HNIs) rose to ₹5.38 trillion by the end of the March 2025 quarter, up 32 per cent from ₹4.07 trillion in the same period last year, according to data from the Securities and Exchange Board of India (Sebi).

 

The increase is linked to rising market volatility and shifting global macroeconomic trends, prompting affluent investors to diversify their portfolios and reduce exposure to traditional asset classes. The move towards AIFs reflects a growing interest in investment options that provide broader risk management and are less correlated with public markets.

 

These evolving market conditions are encouraging HNIs to move away from conventional assets like equities and fixed income instruments, according to a report by Multi-Act Trade and Investments, an investment advisory firm.

 

AIFs are privately pooled investment vehicles regulated by Sebi, which invest in line with a defined strategy. They are classified into three categories: Category I includes venture capital and infrastructure funds; Category II covers private equity and debt funds; and Category III consists of hedge funds and other complex strategies. These funds are typically accessed by institutional and wealthy investors. 

 

The trend marks a notable shift in allocation strategies among HNIs and family offices, with many focusing on private market opportunities that allow for longer investment horizons. “Family office portfolios have a really long horizon, so their ability to participate in private investments is much higher than most other investors,” the report stated.

 

The appeal of AIFs lies in their potential to deliver higher returns and offer stability during periods of market stress. The surge in interest has been driven by the need for diversification, a hedge against inflation, and access to expert fund management.

 

HNIs are investing across a wide range of segments including private equity, venture capital, credit strategies, real estate-focused AIFs, long-short hedge funds, and other portfolio management strategies. Younger investors, in particular, are showing interest in ESG-linked funds, climate-tech ventures, and sustainable finance vehicles.