Individual investors' share in AIF commitments at 40%, shows data

Institutional investors continue to drive commitments for the Alternative Investment Fund (AIF) industry, accounting for 55 per cent of the inflows.

However, individual investors, too, have warmed up to investing in this relatively high-risk investment vehicle. As of September 2023, the share of individual investors (domestic) stood at 40 per cent, up from 35 per cent at the end of FY23. Meanwhile, the share of NRIs and overseas investors shrunk to 5 per cent, according to a report by CAMS and Equalifi on alternative asset trends. 

With a 56 per cent share, individual investors have emerged as the majority contributors in category III AIFs — which are hedge funds investing mostly in listed equities.

Though the minimum investment for AIFs is Rs 1 crore, two-thirds of the total investors have committed to a higher ticket denomination of Rs 5 crore or more.  

Of the total commitments, nearly 80 per cent was garnered by Category I and Category II funds.

In FY23, the participation by direct investors rose to 42 per cent from 27 per cent in FY19, while the distributor share has gone down from 73 per cent to 58 per cent during the same period. 

Last year, the market regulator also streamlined upfront commissions in AIFs for distributors and introduced a trail model. The Securities and Exchange Board of India (Sebi) has also asked AIFs to offer direct plans for the schemes. Experts believe these changes may bring more direct investors.  

The CAMS-Equalifi report also indicates a shifting trend in the age group of investors. While there was a dominance of above 60-year-olds in the total investors, with a 40 per cent share in FY19, it has now come down to 28 per cent, as of September 2023. 

Meanwhile, women investors accounted for nearly one-third of the total investments.