An Alternative Investment Fund (AIF) is any collective investment vehicle that is not a UCITS — the category covers real estate, private equity, private credit, hedge and infrastructure funds — managed by an Alternative Investment Fund Manager (AIFM) authorised under the EU's AIFMD. Access is typically reserved to professional or qualifying investors, and liquidity is defined by each fund's own rules rather than by law.
European fund regulation splits the world in two. UCITS funds are built for the retail public: liquid assets, diversification limits, frequent redemption. Everything else — the fund buying Roman office buildings, the fund working out non-performing loans, the absolute-return strategy trading equity derivatives — is an AIF. The label says nothing about risk by itself; it says the fund has more freedom, and that the regulator supervises the manager rather than micromanaging the portfolio.
What counts as an AIF
General rule The Alternative Investment Fund Managers Directive (AIFMD, 2011/61/EU) defines an AIF by exclusion: a collective investment undertaking that raises capital from a number of investors to invest it under a defined investment policy for the benefit of those investors, and that does not require authorisation as a UCITSEUR-Lex. The definition is deliberately wide. A closed-ended real estate fund in Milan, a Malta-domiciled SICAV sub-fund trading derivatives, and a distressed-credit vehicle all sit in the same legal category — what they share is the supervision regime, not the strategy.
That regime rests on the manager. An authorised AIFM must meet capital, governance, risk-management and valuation requirements, appoint a depositary to hold the fund's assets, and report positions and leverage to its regulatorEUR-Lex. Those duties were revised by Directive (EU) 2024/927 — AIFMD II — which member states had to apply from 16 April 2026, tightening delegation and substance requirements and adding a harmonised regime for loan-originating fundsEUR-Lex; the consolidated text now in force is the version to readEUR-Lex.
Framont example For the funds available through Framont Access, the AIFM is Framont & Partners Management Ltd, authorised by the Malta Financial Services Authority. Do not take that from this page: an AIFM's authorisation, its exact registered name and its current status can be confirmed by searching the entity in the MFSA Financial Services RegisterMFSA, which is the only record that stays current if the position changes.
Not every AIF manager is a full AIFM
General rule AIFMD sets thresholds below which a manager registers with its regulator instead of holding a full authorisation: broadly, portfolios of AIFs under EUR 100 million including assets acquired through leverage, or under EUR 500 million where the funds are unleveraged and grant no redemption rights for five yearsEUR-Lex. This matters to an investor for a practical reason rather than a technical one. A sub-threshold manager is subject to registration and reporting, not to the full depositary, capital, valuation and conduct regime, and it cannot use the AIFMD marketing passport — so a fund it manages may be distributed only under national private-placement rules, where they exist. Before assuming a fund carries the full AIFMD protections, establish which regime its manager is actually under.
The shapes an AIF takes
Three structural choices define how a given AIF behaves in practice:
- Open-ended vs closed-ended. Open-ended funds issue and redeem units at net asset value on a dealing schedule — monthly or semi-annual dealing is common for liquid strategies. Closed-ended funds raise capital, invest it, and return it as assets are realised; you exit through distributions, not redemptions. Real estate and credit funds are usually closed-ended because their assets cannot be sold on demand.
- ItalyReserved funds. Italy's fondi riservati restrict participation to professional investors or, under conditions set by ministerial decree, to non-professional investors subscribing above defined thresholdsCONSOB. In exchange they gain freedom in concentration and leverage that retail funds do not have. This is a national regime: the thresholds below are Italian and do not describe reserved or professional funds in other member states.
- MaltaNotified AIFs. Malta's NAIF regime lets an authorised AIFM launch a fund by notifying the MFSA rather than obtaining a full product licence; the MFSA includes the fund in its list of notified AIFs, and the responsibility for the fund and its compliance rests on the AIFM rather than on a product authorisationMFSA. Notified AIFs are restricted to qualifying or professional investors and often sit as sub-funds of a SICAV umbrella. The regime removes a product licensing step; it does not remove the AIFMD obligations that sit on the manager.
AIF vs UCITS
| Feature | AIF | UCITS fund |
|---|---|---|
| Investor base | Professional / qualifying, retail only by exception | General public |
| Eligible assets | Broad: real estate, loans, private companies, derivatives | Restricted list of liquid instruments |
| Diversification rules | Set by the fund's own documents | Strict statutory limits (e.g. 5/10/40) |
| Liquidity | Fund-defined: monthly, semi-annual, or closed-ended | Redemption at least twice a month, usually daily |
| Leverage | Permitted, disclosed and reported to the regulator | Tightly limited |
| Key document | Offering Memorandum / Fund Rules | Prospectus + PRIIPs KID |
| Typical use | Specialist and illiquid strategies | Core liquid portfolios |
The trade is symmetrical. A UCITS accepts eligible-asset, diversification and liquidity constraints, and redemption at least twice a month, in return for a passport to sell to the retail public across the EUEUR-Lex; an AIF gives up the broad investor base to reach assets and techniques a UCITS cannot touch. Neither is "better" — they answer different questions.
Who can invest, and why the door is narrow
General rule Most AIFs are limited to professional investors as defined by Annex II of MiFID II: entities that qualify by category, and individuals who may be treated as professional on request only where the firm assesses their expertise, experience and knowledge and they meet at least two of three quantitative tests on transaction frequency, portfolio size and professional backgroundEUR-Lex — or to qualifying investors meeting minimum-subscription thresholds set by national law or the fund's rules.
Italy The Italian thresholds are the ones most often quoted, and most often quoted out of date. Since the 2022 amendment to the implementing decree, a non-professional investor may subscribe an Italian reserved AIF from EUR 500,000 where the subscription is made directly, or from EUR 100,000 where it is made through an investment advisory service and the investment stays within 10 per cent of the investor's financial portfolioGazz. Uff.. Quoting the EUR 500,000 figure alone, as a great deal of material still does, describes only the unadvised route. The logic behind either threshold is straightforward: where a fund holds assets that cannot be sold quickly and prices that cannot be checked daily, the regulator wants investors who can evaluate the strategy, absorb the illiquidity and negotiate the terms.
Liquidity and dealing: read this twice
The single most common mistake with AIFs is treating them like funds you can leave at will. Before subscribing, establish four things from the offering documents: the dealing frequency (when you can subscribe or redeem, if at all); the notice period required before a redemption; any lock-up or gate provisions that can suspend or scale down redemptions; and, for closed-ended funds, the fund term — which for real estate vehicles can run to decades. None of this is hidden; all of it is binding.
What to read before subscribing
- The Offering Memorandum (with its Offering Supplement for a specific sub-fund) or, for Italian reserved funds, the Fund Rules / Regolamento di Gestione. This is the contract: strategy, restrictions, fees, dealing, governance.
- The fee schedule — management fee, performance fee and its mechanics (hurdle, high-water mark), plus fund-level costs such as valuation, audit and depositary fees.
- The valuation policy — who values illiquid assets, how often, and with what independence.
- The subscription agreement — your representations, the eligibility category you are certifying, and the transfer restrictions on your units.
These documents are available on request from the AIFM for every fund listed on the Funds page.
AIFs on Framont Access
Framont example Framont & Partners Management Ltd manages a focused range of AIFs across three families: Italian real estate (Gentile da Fabriano, Orizzonte, Wright, Real Sequoia, Pinnacle Investment — closed-ended reserved funds spanning long-horizon income, Rome-focused development and pan-European diversification), credit (Hubble Capital's distressed-credit compartment and CIREDCO Fund 1, both working Italian non-performing exposures secured by real estate), and capital markets (Asymetria Fund, an absolute-return equity-derivatives sub-fund with monthly dealing, and Earth Horizon Fund, a private equity sub-fund — both Notified AIFs under the Global Series SICAV umbrella in Malta). Fund documents are available from the management company on request.