Alternative investment funds solve the supply-side of mainstream investing by creating companies of scale that can attract mainstream investors. Discuss (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The increased volatility of listed equities in 2020-21, historic low-interest rates that caused negative yields amongst $28 trillion of the $42 trillion outstanding bonds in 2020.
· In India, the traditional three asset classes have been FDs, gold, and mutual funds. The pandemic, which saw over 2.6 million Demat accounts open monthly.
· The alternatives industry in India is dominated by venture capital funds, private equity funds, hedge funds, venture debt funds and, now, special situation funds.
· The alternatives space is predicated on two important principles: Innovation always outstrips policy and regulations, and capital is cowardly.
· The government has taken this one step forward in Budget FY23 by announcing the creation of an expert committee to conduct “a holistic examination of regulatory and other frictions” that affects the private equity and venture capital industry.
· This step signals the intent of the government to support the alternatives industry and is a sign that the industry is viewed as a partner in nation-building and economic development.
· Alternative investment solve the supply-side of mainstream investing by creating companies of scale that can attract mainstream and retail investors.
· For a country that aims to grow to a $5 trillion GDP by 2025, the alternatives and the innovation economy are expected to contribute $1 trillion to this goal.
