India's alternative investment fund assets surge to 7.59 lakh crore

Assets under management for alternative investment funds in India expanded to 7.59 lakh crore as of June 30, 2026, marking a 28.3 per cent increase over the previous year. According to The Hindu BusinessLine, this growth continued a trend of expansion, following year-on-year increases of 24.7 per cent and 26.7 per cent in the preceding two fiscal years. The total asset base was previously 5.91 lakh crore at the end of the previous fiscal year.

Category II funds, which primarily invest in private equity and debt instruments, accounted for 4.78 lakh crore of the total, representing approximately 63 per cent of cumulative assets. These funds grew by 26 per cent year-on-year. Category III funds recorded the highest growth rate among the three categories, expanding by 35.2 per cent to reach 2.17 lakh crore. Category I funds, which target specific sectors such as venture capital and infrastructure, grew by 24.5 per cent to 63,487 crore, making up 8.4 per cent of the total.

Domestic investors remained the largest source of funding, with gross cumulative funds raised from them reaching 6.06 lakh crore, a 38.5 per cent year-on-year increase. In contrast, foreign portfolio investors reduced their cumulative holdings by 41.7 per cent to 1,247 crore. Madan Sabnavis, chief economist at Bank of Baroda, noted that this behavior aligns with broader capital market trends, citing lower investible resources from Western markets. Chintan Hefa, executive director at Grant Thornton Bharat, added that foreign portfolio investors constitute less than one per cent of foreign money in AIFs, with non-resident Indians and other foreign investors accounting for 95 per cent of foreign AUM.

Investment allocations favored unlisted and equity-linked securities. AUM in unlisted securities rose by 21.8 per cent to 4.28 lakh crore, while equity and equity-linked instruments increased by 30.2 per cent to 4.73 lakh crore. Real estate investments rebounded with a 24 per cent year-on-year growth to 87,969 crore, reversing a previous contraction. Financial services emerged as the fastest-growing major sector, expanding by 50.4 per cent to 69,083 crore. Conversely, pharmaceutical investments slowed significantly, growing by only 2.7 per cent to 23,323 crore, a sharp deceleration from the 39.9 per cent growth recorded in the previous year.