Several global factors may impact the numbers in the investment market in 2025. Traditional, go-to investment tools remain an option, yet many are thinking of alternative investments to not only generate a return on investment but also to safeguard their capital. In this discussion, three investment options must come in - REITs, AIFs, and gold. These three are often considered among the less risky investments that come with significant benefits.

For 2025, will REITs, AIFs, and gold continue to be safe investment vehicles? What else is there to know before moving forward with said investments? Let’s find out!

REITs

Real Estate Investment Trusts (REITs) are becoming one of the leading alternative investment choices among Indian investors in 2025. REITs enable people to have exposure to commercial property without directly owning or having to manage the property. Historically held by institutions or high-net-worth individuals (HNIs), REITs have now brought high-end real estate to retail investors through small-ticket investments.

What are REITs?

A REIT is a company or firm that owns and manages real estate with the objective of generating income. They pool funds from investors and are obligated to distribute 90% of their net cash flow within 6 months. This format ensures that investors receive a reliable stream of income, making REITs a preferred choice compared to conventional fixed-income products.

In India, REITs are governed by the regulatory system of the Securities and Exchange Board of India (SEBI), which provides transparency in financial matters and investor protection.

Why Invest in REITs?

With India's real estate market poised for growth and REIT investing offering income and diversification benefits, it presents an attractive alternative investment for 2025.

Stable Income and Capital Growth

REITs provide large dividend income based on the rental returns of quality real estate properties. The investments can also appreciate in the long term, particularly with an increasingly urbanising economy.

Diversification

REITs are a simple means of diversification for investment portfolios. Since the majority of REITs are listed on open stock exchanges, investors can diversify their risks without the inconvenience of managing properties directly.

Liquidity

As compared to physical property, REIT units are simple to purchase or sell in the stock market, resulting in increased flexibility and liquidity for investors.

Transparency and Regulation

REITs must report audited financials and operating data, keeping investments transparent. The SEBI regulation introduces an added level of comfort for individual investors.

Risk-Adjusted Returns

REITs provide returns that are adjusted for market risk and inflation and, hence, is an option for those looking for stable cash flow and relatively stable returns.

AIFs

Alternative Investment Funds (AIFs) are quite popular among HNI investors in India. SEBI launched AIFs in 2012 under the Alternative Investment Funds Regulations, where investment funds are created with pooled capital from domestic and international investors. Such funds are mostly invested in private equity, real estate, venture capital, hedge funds, and commodities.

What Are AIFs?

An AIF is usually established in the form of a trust, company, or LLP. It has three participants:

• Setlor: who creates the AIF trust

• Trustee: who operates the fund pool

• Contributors: who invest funds into the fund

AIFs are organised under three categories:

• Category I: Invests in startups, SMEs, and socially useful sectors

• Category II: Private equity and debt funds

• Category III: Uses sophisticated strategies, including hedge funds, for high returns

These funds are typically targeted for HNIs, Ultra HNIs (UHNIs) and Foreign Institutional Investors (FIIs). They are not traded on a stock exchange and entail a longer lock-in duration, thus ideal for experienced investors with greater risk-taking ability.

Why Invest in AIFs?

As of March 2025, over ₹13.49 lakh crore investment has been made in AIFs. With benefits like the following, AIFs can be considered as an investment option in 2025.

High Return Potential

AIFs hold the potential for substantial capital appreciation. The investment strategy flexibility enables fund managers to seize out-of-the-way opportunities not accessible in conventional markets.

Lower Volatility

AIFs are not directly subject to the volatility of the stock market. This renders them relatively stable, particularly during volatile or bearish equity markets.

Portfolio Diversification

Through investment in asset classes such as real estate, commodities, or unlisted companies, AIFs deliver high diversification benefits and minimise concentration risk in an investor's portfolio.

Regulatory and Economic Support:

A growing economy in India and increasing HNI investments are driving AIF growth. In addition, efforts by SEBI and RBI to simplify AIF operations have enhanced investor confidence.

Gold

Gold is still among the most tried-and-tested alternative investment tools in 2025, with the potential for both safety and appreciation during periods of economic turmoil. Its predictable returns, inflation-hedging capabilities, and growing international demand still make it a credible asset within a diversified investment portfolio.

What Makes Gold a Considerable Investment option?

Gold is a physical commodity with inherent value, as opposed to paper money or electronic tokens. Historically considered a store of wealth, it holds up well under inflation, geopolitical unrest, and financial market routs. Recent history verifies this attraction as gold climbed almost 28% in 2024, and during 2025, it has already risen 10% in March and 6% in April. It has reached record highs in leading currencies, such as the Indian Rupee, US Dollar, and Euro.

The gold metal is becoming an investment mainstream due to central bank demands around the world. With currency devaluations, escalating global debt, and ongoing international trade tensions, gold is being sought more as a safe haven.

Why Invest in Gold in 2025?

Gold’s, more or less, stable market holds earns a certain level of trust from the investors. As 2025 gold price predictions look positive, investors may just continue to rely on gold.

Hedge Against Inflation & Market Volatility

Gold retains value when inflation increases, and stock markets become volatile. As stagflation threats loom and the world's debt swells above $36 trillion in the US alone (as of November 2024), gold provides firmness when other assets lose steam.

Strong Demand & Price Momentum

Gold ETFs have seen record inflows. As of early 2025, gold is at over $3,200/ounce, and analysts foresee high support at $2,800–$2,955/ounce levels, perfect buy zones for long-term accumulation.

Liquidity & Accessibility

Digital gold, Sovereign Gold Bonds (SGBs), and gold ETFs have made it easier to invest in gold. Gold is very liquid and does not demand a huge amount of capital to be invested like real estate, which makes it excellent for short and medium-term requirements.

Portfolio Diversification

Gold investment plays a distinct role in hedging multi-asset portfolios. Seasoned investors and market experts have also been focusing on gold for the same purpose.

Tax Efficiency in Sovereign Gold Bonds SGBs

SGBs provide not only capital appreciation but also periodic interest income, and redemptions are tax-exempt for individuals, hence tax-efficient as compared to other securities.

Wrapping Up!

It is always suggested to get the individual investment goals and risk appetite evaluated before making investment decisions. While REITs, AIFs, and gold have their own advantages, they are quite different in nature, with varying features. Knowing they are viable options for 2025 investments, now is the time to compare the options and find aligned features and requirements to locate the ideal investment tools.

Sources:

• https://www.cnbctv18.com/market/commodities/gold-prices-rates-10-reasons-why-to-buy-in-2025-investment-outlook-19587786.htm

• https://www.bajajfinserv.in/gold-price-prediction-in-2025

• https://www.livemint.com/money/personal-finance/investing-in-gold-or-real-estate-in-india-in-2025-compare-tax-benefits-liquidity-and-returns-to-decide-11746009428553.html

• https://www.gripinvest.in/blog/top-alternative-investment-funds-in-india

• https://groww.in/blog/all-about-alternate-investment-funds-aifs

• https://economictimes.indiatimes.com/markets/stocks/news/who-should-invest-in-reits-understanding-risk-and-investment-goals/articleshow/119788390.cms

• https://groww.in/p/real-estate-investment-trust-reit

The Tax calculation shown above is for illustration purpose and general information only. Investors are advised to consult their Tax Consultant or Financial Advisor to determine tax benefits applicable to them.
Security investments are subject to market risk and there is no assurance or guaranteed that the investment objective will be achieved. This document is for knowledge purpose only.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.