The investments made by Alternative Investment Funds (AIFs) in the listed securities have surged 48.35% on year till September-end, according to the latest data available on Securities & Exchange Board of India (Sebi).
Investments made by these funds, which allow sophisticated investors to invest in non-traditional assets like private equity, hedge funds, and real estate, in listed securities stood at Rs 1,98,950 crore while that in unlisted securities, it was at Rs 3,76,039 crore.
Capital Deployment
According to industry players the increase in investments in the listed securities was as they found various opportunities in the listed equity markets following the correction post September. Abhishek Mishra, Founding Partner at SKG Investment & Advisory, CAT 3 AIF explained that cumulatively, AIFs had raised about Rs 5.01 lakh crore as of September 2024, against investments of Rs 4.49 lakh crore, leaving meaningful unutilised capital within the system and over the next year, fundraising accelerated sharply, with cumulative funds raised increasing to Rs 6.36 lakh crore by September 2025, while investments rose to Rs 6.12 lakh crore.
“This scale up highlights the depth of capital with AIFs and their ability to deploy quickly when opportunities emerge. The 2024 market correction created such opportunities, prompting higher investments and a decline in unutilised capital,” he said.
At the same time, he added private markets continue to form the core of AIF strategies. He added, “The recent increase in listed equity investments should therefore be seen as a measured rebalancing rather than a structural shift. Improved liquidity, faster deployment and clearer earnings visibility in sectors such as Financials, Real Estate, IT and Pharmaceuticals have made listed markets an attractive avenue in the current cycle.”
According to Puneet Sharma, CEO and Fund Manager of Whitespace Alpha, CAT 3 AIF, the increase during this period was led by increased interest of investors in the equity market who had a deviant view on the market and came in anticipation of upside after the correction. “The increase in AUM of AIF equity schemes shows that larger and sophisticated investors are keen on participating in equity market and the performance of these schemes have also been great,” he said.
Beyond Mutual Funds
Sharma believes that this trend is expected to continue. “As there is an increase in the net worth of people, they are going to experiment with products other than mutual funds,” he said, noting that some investors are waiting to see the performance that SIFs deliver before shifting and have parked their money in AIFs as well as liquid funds.
Mishra added that correction from last September created compelling entry opportunities in quality stocks where valuations corrected without a corresponding deterioration in fundamentals and this environment naturally favoured AIFs, given their ability to deploy capital swiftly and selectively.