Risk Mitigation

  1. Portfolio Diversification

   – AIFs reduce exposure to specific asset classes or sectors by diversifying investments across multiple assets or markets.  

  1. Thorough Due Diligence

   – AIFs conduct comprehensive research and analysis before investing in companies or projects.  

  1. Use of Derivatives and Hedging

   – Category III AIFs often use derivatives to hedge risks, such as market volatility or currency fluctuations.  

  1. Structured Governance Models

   – Strong internal controls and oversight ensure transparency and reduce operational risks.  

  1. Regulatory Compliance

   – Adherence to regulations (e.g., SEBI norms in India) ensures ethical and risk-aware fund management.