Under regulation 3(4) of the SEBI (Alternative Investment Funds) Regulations, 2012, in which category is a hedge fund that uses complex trading strategies and leverage, including through…
Question and options
Under regulation 3(4) of the SEBI (Alternative Investment Funds) Regulations, 2012, in which category is a hedge fund that uses complex trading strategies and leverage, including through derivatives, registered?
Category I AIF
Category III AIF
Category II AIF
Angel fund, a sub-class of Category I
Answer and explanation
Regulation 3(4)(c) of the SEBI (Alternative Investment Funds) Regulations, 2012 places in Category III funds, including hedge funds, that employ diverse or complex trading strategies and may employ leverage, including through listed or unlisted derivatives. Category II covers funds such as private equity and debt funds that do not undertake leverage except for day-to-day needs, and Category I covers venture capital, angel and other funds with positive spill-over effects.
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