AIFs gain traction as investments rise 32 pc to ₹5.38 lakh cr by March 2025
New Delhi, India's affluent investors are increasingly turning to Alternative Investment Funds , with investments in the space reaching ₹ 5.38 lakh crore by the end of the March 2025 quarter, a surge of 32 per cent from the year earlier.
This increase is being driven by heightened market volatility and shifting global macroeconomic conditions, prompting the wealthy to seek more diversified and resilient portfolio options, according to investment advisory firm Multi-Act Trade and Investments.
This trend marks a departure from the traditional equity-debt mix, as the country's affluent investors or High Networth Individuals move into the AIFs space, which include private equity, hedge funds, real assets, private credit, and other non-traditional instruments that typically have low correlation with public markets.
The appeal of these alternatives is driven by their potential to offer higher returns as well as stability during periods of market stress.
"As HNIs navigate persistent volatility, global macroeconomic shifts, and a low-yield environment, the demand for diversified and resilient portfolios is on the rise," Multi-Act noted.
To support this view, Sebi data showed that cumulative investments in Indian AIFs surged 32 per cent year-on-year to ₹ 5.38 lakh crore in Q4 FY2025 from ₹ 4.07 lakh crore in Q4 FY2024. This suggests a clear shift in asset allocation strategy among HNIs and family offices.
"Family office portfolios have a really long horizon, so their ability to participate in private investments is much higher than most other investors," the firm added, highlighting a key advantage that allows these entities to engage in alternative assets.
Multi-Act attributed this increase to a combination of factors such as the need for diversification, a hedge against inflation, and access to expert management.
AIFs have been divided into three categories I, II, and III covering early-stage venture capital, private equity, private credit, infrastructure, and long-short hedge strategies each offering a unique mix of risk, return potential, and liquidity.
By allocating across these diverse strategies, HNIs can reduce their dependence on public markets, manage concentration risks more effectively, and build investment portfolios that are structurally more resilient across market cycles.
Moreover, HNIs are allocating across a diverse range of alternative asset classes such as private equity & venture capital, real estate AIFs, hedge funds & PMS strategies, credit alternatives, and sustainable & impact alternatives.
As per the investment advisory firm, many young affluents prefer ESG-themed AIFs, climate-tech venture funds, to blended finance vehicles and sustainable alternatives.
According to Knight Frank Global Wealth Report 2025, India is now home to 85,698 individuals with assets exceeding USD 10 million. This accounts for 3.7 per cent of the world's ultra-wealthy population, positioning India fourth globally after the US , China , and Japan .
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