Crorepati investors lose up to 16% in May’s market selloff, shows AIF data

It is not just retail investors who have burnt their fingers in equities in the ongoing painful phase of the market, even some of India’s ultra-rich and sophisticated crorepati investors relying on AIFs or Alternative Investment Funds lost up to 16 per cent of their wealth in the month of May alone.

Data pulled from PMSBazaar showed that the closed-ended Rs 420 crore Malabar Value Fund was the top loser among AIFs and reported a downside of 15.76 per cent in May. Sunil Singhania-led Abakkus Asset Managers’ Emerging Opportunities Fund-1 also reported a monthly negative performance of 10.9 per cent. Funds managed by Nippon India, Aequitas Equity Fund, Sageone and Alchemy were also among the top losers on the monthly charts.

None of the AIF funds in the ‘Long Only’ category managed to eke out a positive return.

While headline index Nifty50 lost 3.03 per cent in May, the selloff was sharper in the broader market. Nifty Midcap 100 lost 5.33 per cent and Nifty Smallcap 100 slipped 10.2 per cent during the period. Since then, the indices have hit 52-week lows.

Unlike mutual funds and even PMSes (portfolio management services), Category-III AIFs are allowed to employ complex trading strategies for sophisticated investors willing to invest at least Rs 1 crore in high-reward and high-risk bets. Sebi rules allow AIFs to employ leverage including through investment in listed or unlisted derivatives.

During the month of May, AIF schemes that adopted a long short strategy, however, fared better with some even managing a positive return. ITI Long Short Equity Fund was the top performer in the pack. AIF funds from the stable of Tata, Altacura AI Absolute Return Fund, Vasisth Capital, Avendus and

also managed to end May in green.

Explaining the reason behind the outperformance, Ajay Vaswani, Senior Vice President, ITI Long Short Equity Fund, told ETMarkets that their net equity exposure was just 16 per cent on an average last month. “Since the last six months, we have been maintaining a cautious stance due to rising inflation and higher interest rates. The long short strategy helped us to restrict the downside and also capture the upside momentum,” he said.

If you look at the last one year returns, then crorepati investors have managed to beat the index. While the Nifty is down about 2.5 per cent in the last one year, AIF funds have managed impressive returns of up to 46 per cent with Aequitas Equity Fund being the top scorer.

Other winning funds include Roha Emerging Companies Fund, Alchemy Capital’s Leaders of Tomorrow and First Water Capital Fund with returns varying between 21-29 per cent.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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