Alternative Investment Funds (AIFs) are a category of investment vehicles that pool funds from various investors to invest in assets other than traditional stocks, bonds, and cash. AIFs offer diversification and access to unique opportunities. They can be classified into three categories:

1. Hedge Funds: These aim to generate returns by employing various strategies, often in less liquid markets. Strategies include long/short equity, event-driven, and arbitrage.
2. Private Equity Funds: Invest in private companies, either providing capital to startups or acquiring established businesses. These investments typically have longer horizons and can be illiquid.
3. Real Estate Funds: Invest in real estate assets like properties, infrastructure, or real estate investment trusts (REITs). They offer income and potential capital appreciation.

Key AIF features:

1. Diversification: AIFs spread investments across various assets, reducing risk compared to single-asset investments.
2. Professional Management: AIFs are managed by experienced fund managers who make investment decisions on behalf of investors.
3. Illiquidity: Some AIFs have longer lock-in periods, meaning investors may not be able to access their funds easily.
4. Regulatory Framework: AIFs are subject to regulatory oversight, which varies by jurisdiction, to protect investors.

Investing in AIFs can offer potential for higher returns but comes with increased risk due to the nature of alternative investments. It's crucial for investors to thoroughly research, understand the fund's strategy, and assess their risk tolerance before considering AIF investments.