Tata AMC exits AIFs amid tax pressure, SIF competition

Tata Asset Management Co.(AMC) has shutdown its Category III alternative investment fund (AIF) business citing unfavourable taxation and stiff competition from specialized investment funds (SIFs), according to two people familiar with the matter.

- Apoorva Ajith

“It didn’t make sense to keep the AIF with the current tax structure as the post-tax return was low. SIFs offer better tax and higher returns,” an executive at an AMC said on the condition of anonymity.

AIFs are privately pooled investment funds that invest in alternative assets such as private equity, hedge funds and other nontraditional investments beyond traditional stocks and bonds, with wealthy individuals and institutions as their main investors. Regulated by the Securities and Exchange Board of India (Sebi), there are three categories of AIFs, with Category III focusing on high-risk, high-return trading strategies using leverage.