How Much of Your Portfolio Should Be in AIFs?
Understanding the AIF Decision
There is no universal percentage. A sensible ceiling depends on liquid net worth, spending needs, business and ESOP exposure, real estate, existing private investments and the timing of future calls. The ₹1 crore minimum can make a technically eligible investor economically unsuitable.
Reading the Structure and Economics
Measure the commitment against investable financial assets, not headline net worth.
Include unfunded commitments when calculating exposure.
Separate capital intended for growth, income and near-term obligations.
Where the Investor Can Get Caught
A founder may already have most wealth in one illiquid private company.
Real estate cannot reliably fund a capital call on short notice.
Multiple funds of the same vintage can create a later concentration in exits and calls.
Making the Allocation Decision
Before acting, answer five questions in writing: build a 24-month liquidity map; count business, esop and unlisted holdings as private exposure; set a maximum illiquid-assets ceiling; pace commitments across vintages and strategies; and recalculate after each liquidity event.
Capacity for a ₹1 crore ticket is not the same as capacity for a ₹1 crore illiquid commitment.
Key takeaways
- Measure the commitment against investable financial assets, not headline net worth.
- A founder may already have most wealth in one illiquid private company.
- Capacity for a ₹1 crore ticket is not the same as capacity for a ₹1 crore illiquid commitment.
Related questions
What should an investor verify first?
Measure the commitment against investable financial assets, not headline net worth.
How does the structure affect the investor’s outcome?
Include unfunded commitments when calculating exposure.
What is the main downside to test?
A founder may already have most wealth in one illiquid private company.
How should the final decision be made?
Capacity for a ₹1 crore ticket is not the same as capacity for a ₹1 crore illiquid commitment.
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