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
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 under a defined policy, and that is not a UCITS. 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, valuation and reporting requirements, appoint a depositary to hold the fund's assets, and report positions and leverage to its regulator. For the funds available through Framont Access, the AIFM is Framont & Partners Management Ltd, authorised by the Malta Financial Services Authority (MFSA).
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.
- Reserved funds. Italy's fondi riservati — reserved AIFs — restrict participation to professional investors or, under conditions, to investors subscribing above defined thresholds. In exchange they gain freedom in concentration and leverage that retail funds do not have.
- Notified AIFs. Malta's NAIF regime lets an authorised AIFM launch a fund by notification to the MFSA rather than a full product licence, cutting time to market to weeks. The regulatory burden shifts onto the AIFM, which takes responsibility for the fund. Notified AIFs serve professional and qualifying investors only, and often sit as sub-funds of a SICAV umbrella.
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: UCITS gives up strategy freedom for daily liquidity and retail protections; 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
Most AIFs are limited to professional investors as defined by MiFID II — institutions, or individuals who opt up by demonstrating portfolio size, transaction frequency and relevant experience — or to qualifying investors meeting minimum-subscription thresholds set by national law or the fund's rules. Certain Italian reserved real estate funds, for example, accept non-professional subscriptions from €500,000. The logic 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 & 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.