Alternative Investment Funds Manager Workbook is a comprehensive reference developed by the National Institute of Securities Markets (NISM) to empower aspiring and existing professionals with robust knowledge of India’s alternative investment funds (AIF) landscape. This workbook covers everything from basic investment concepts and modern portfolio theory to AIF structuring, governance, performance measurement, taxation, and regulatory compliance—making it a one-stop reference for readers who wish to excel in managing alternative investment funds.

This book is intended for the following audience:

• Aspiring & Existing AIF Managers – Individuals responsible for structuring AIFs, designing investment strategies, and managing day-to-day operations
• Investment Teams & Service Providers – Professionals such as analysts, fund administrators, custodians, valuers, and compliance officers requiring comprehensive AIF insights
• Students & Job Aspirants – Those looking to enter or advance in the securities markets, seeking formal certification and a thorough grounding in AIF products
• Financial Intermediaries & Advisors – Market participants, consultants, and advisors aiming to stay updated on AIF regulations and best practices
• Finance Enthusiasts & Policy Makers – Anyone passionate about understanding the strategic, operational, and regulatory underpinnings of alternative investments in India

The Present Publication is the March 2025 Workbook Version. It is developed in collaboration with the Certification Team of NISM, Archit Lohia, Pratap Giri and Dr Rachana Baid and reviewed by Biharilal Deora and Taxmann’s Editorial Board. NISM. It is published exclusively by Taxmann, with the following noteworthy features:

• [Comprehensive Coverage of the AIF Ecosystem] Spans from basic investment concepts, portfolio theories, and global best practices to the specific categories and structuring of AIFs in India
• [Regulatory & Governance Insights] Incorporates SEBI (AIF) Regulations, FEMA, PMLA, SEBI (PIT) Regulations, and more, ensuring professionals are well-equipped for compliance
• [Structured Approach to Fund Management] Discusses fund due diligence, legal documentation, valuation, fund performance measurement, and risk management in a step-by-step manner
• [In-depth Taxation Aspects] Explains taxation structures for all categories of AIFs and their investors, complete with examples and practical scenarios
• [Practical Illustrations & Examination Readiness] Includes sample case studies, numerical examples, and practice questions resembling the actual certification exam format to reinforce learning

The coverage of the book is as follows:

• Investment Foundations
  • Investment Landscape
    • Basics of investments vs. speculation, objectives, and estimating required rates of return
  • Traditional vs. Alternative Investments
    • Features, types, growth drivers, and the role of alternative asset classes in portfolio diversification
• Market Efficiency & Portfolio Theories
  • Concept of Informational Efficiency
    • Understanding random walk theory, EMH, and implications for valuation
  • Modern Portfolio Theory & Capital Market Theory
    • Portfolio risk/return calculations, efficient frontier, CAPM, and multifactor models
• AIF Structures & Suitability
  • Evolution of AIFs in India
    • Growth, enabling factors, and market comparison between different AIF categories
  • AIF Ecosystem
    • Roles of sponsors, trustees, managers, and other service providers
  • Fund Structuring
    • Pooling principles, trust and company structures, and comparative analysis of LLPs vs. corporate vehicles
• Fee Structure & Performance
  • Management Fees & Other Expenses
    • Hurdle rates, high-water marks, and variations in fee models
  • Performance & Risk Metrics
    • Sharpe ratio, drawdown analysis, pre- and post-tax returns, and risk-adjusted measures
  • Indices & Benchmarking
    • Construction and usage of indices, stock-bond composite indices, and performance benchmarking for AIFs
• Investment Strategies & Governance
  • Investment Process
    • Deal sourcing, due diligence, negotiating definitive agreements, co-investments, and best practices
  • Governance & Conflict Management
    • SEBI guidelines on governance, code of conduct for managers, and investor protection rights
• Valuation & Reporting
  • Valuation Techniques
    • Equity, fixed-income, and business valuation approaches, NAV computation, and roles of third-party valuers
  • Monitoring & Reporting
    • Regulatory mandates for ongoing disclosures, exit strategies, secondary markets for AIF interests, and winding-up processes
• Taxation & Regulatory Framework
  • Taxation of AIFs & Investors
    • Category-wise taxation rules, surcharge rates, set-off and carry-forward provisions, and GAAR
  • SEBI (AIF) Regulations & Related Laws
    • Eligibility, registration process, compliance obligations, FEMA guidelines, PMLA, and insider trading norms

The structure of the book is as follows:

• Chapter-based Format – Seventeen meticulously arranged chapters addressing every facet of AIF management, from foundational concepts to advanced regulatory considerations
• Conceptual Breakdowns & Summaries – Each chapter concludes with concise summaries and key takeaways, enabling quick revision
• Examples & Sample Questions – Interspersed throughout to mirror the type of case-based and multiple-choice questions faced in the actual certification exam
• Regulatory Extracts & References – Provides relevant sections and guidelines from SEBI, FEMA, PMLA, and other authorities for easy cross-reference
• Practical Caselets & Exercises – Helps readers apply theoretical knowledge to realistic scenarios in valuation, fund structuring, compliance, and day-to-day fund operations.

NISM is a leading provider of high-end professional education, certifications, training and research in financial markets. NISM Certification programs aim to enhance the quality and standards of professionals employees in various segments of financial services sector. NISM’s School of Certification of Intermediaries (SCI) develops and conducts certification examinations and Continuous Professional Education (CPE) programs that aim to ensure that professional meet the defined minimum common knowledge benchmark for various critical market functions like:

• Mutual Funds
• Equities
• Derivatives
• Securities Operations
• Compliance
• Research Analysis
• Investment Advice

These Certifications and CPE Programs are being developed and administered by NISM as mandated under ‘Securities and Exchange Board of India (Certification of Associated Persons in the Securities Market) Regulations, 2007’. The Certifications creates quality market professionals and catalyzes greater investor participating in the markets. Certifications also provides structured career paths to students and job aspirants in the securities market.