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Prelims 2025 · Q1 · Financial markets & instruments

With reference to investments, consider the following :

  1. I.Bonds
  2. II.Hedge Funds
  3. III.Stocks
  4. IV.Venture Capital

How many of the above are treated as Alternative Investment Funds?

Show answer

Answer: B. Under SEBI's AIF Regulations, 2012, an Alternative Investment Fund is a privately pooled fund outside the usual stock and bond markets. Venture capital funds are Category I AIFs and hedge funds are Category III AIFs. Ordinary bonds and stocks are traditional investments, not AIFs. So only two are AIFs.

Watch for: Do not count bonds and stocks just because an AIF may invest in them; the question asks what is treated as an AIF.

Why the other options are wrong
  • A. Only one is wrong because both hedge funds and venture capital are AIFs.
  • C. Only three is wrong because bonds and stocks are traditional investments, not AIFs.
  • D. All the four is wrong because bonds and stocks are not AIFs.

Source to check: SEBI (Alternative Investment Funds) Regulations, 2012; SEBI website (AIF categories)

Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.