New Delhi, March 6 -- Tata Asset Management Company has shut down its Category III alternative investment fund (AIF) business citing unfavourable taxation and stiff competition from specialized investment funds (SIFs), according to two people familiar with the matter.

"It didn't make sense to keep the AIF with the current tax structure as the post-tax return was low. SIFs offer better tax and higher returns," an executive at an asset management company (AMC) said on the condition of anonymity.

AIFs are privately pooled investment funds that invest in alternative assets such as private equity, hedge funds and other non-traditional investments beyond traditional stocks and bonds, with wealthy individuals and institutions as their main inv...