An Alternative Investment Fund (AIF) in India is a privately pooled investment vehicle targeting sophisticated investors. Among its three categories, Category III AIFs are notable for employing advanced trading strategies, appealing for their high returns and diversification. These funds differ from mutual funds and may include hedge funds, utilizing leverage for increased investment potential. They can invest in listed and unlisted companies, derivatives, and structured products, with specific investment limits imposed by SEBI. Typically, high-net-worth individuals and Qualified Institutional Investors favor these high-risk funds, which require a minimum investment of ₹1 crore.