Category 3 AIFs delivered a mixed bag in June 2024. Long-Short AIFs underperformed, averaging 3.20%. However, Long-Only AIFs outperformed, averaging 7.19% thanks to their ability to capitalise on favourable market conditions.
In June 2024, Alternative Investment Funds (AIFs) in Category 3 showcased contrasting performance across their long-only and long-short strategies. Long-only AIFs excelled, with an average return of 7.19%, outperforming both the BSE 500 TRI (7.05%) and Nifty 50 TRI (6.77%).
Among the 66 long-only funds, 41 outperformed the Nifty 50 TRI, while 33 outperformed the BSE 500 TRI. In contrast, long-short AIFs experienced a challenging month, averaging 3.20%. Only 5 out of 30 schemes managed to outperform either benchmark.
Top 10 Long-Only Performers
Several Category 3 long-only AIFs demonstrated exceptional performance in June 2024, resulting in an average return of 7.19%.
This success can be attributed to skilful stock picking, effective sector allocation, and the overall resilience of the Indian equity markets during the month.
A9 Finsight's Finavenue Growth Fund took the lead as the No. 1 fund with a remarkable 17.51% return in June, demonstrating their expertise in navigating the market landscape.
Following closely was the Growth Anchors Fund, managed by Motilal Oswal Asset Management Company, showcasing its astute stock selection with a 12.60% return.
Alchemy Capital Management's Leaders of Tomorrow fund secured a notable 12.14% gain and ranked 3rd, capitalising on emerging growth sectors.
At 4th rank is Rational Equity Trust's Rational Equity Flagship Fund 1 as it impressed with an 11.72% return, highlighting their robust risk management capabilities.
360 ONE Asset Management's High Growth Companies Fund secured a 10.18% return and 5th rank, underlining their focus on high-pot ential companies.
These funds showcased robust and peer-beating performance, significantly outpacing the average returns and the benchmarks. This indicates that certain strategies and fund managers were able to deliver exceptional returns and alpha.
The category’s performance compared to benchmark indices is depicted below.
Long-Short Performance
Long-short funds employ complex investment strategies, factoring in multiple quantitative and qualitative factors to select stocks for their portfolios. These funds utilise sophisticated techniques involving derivatives and equities to mitigate portfolio volatility and strive for stable returns.
However, in June 2024, the Long-Short category faced challenges, with an average return of 3.20%. Out of 30 schemes, only 5 managed to outperform the Nifty 50 TRI (6.77%), and the BSE 500 TRI (7.05%).
The top performer in the long-short category in June 2024 was Edelweiss Asset Management's Alternative Equity Scheme, delivering a return of 8.26%. Following closely was Altacura Al's Maximus Fund, achieving a 7.72% return.
Avendus Capital Public Markets Alternate Strategies secured the third position with its Enhanced Return Fund - 2, posting a return of 7.34% in June 2024.
Edelweiss Asset Management also claimed fourth place with its Consumer Trends Fund, which returned 7.12%. Rounding out the top five was WhiteSpace Alpha's Fund I - Equity Plus with a return of 7.07% in June 2024.
Here is a table with the top 5 long-short funds
Other AIFs performance
Category II AIFs, particularly those focused on debt, led the performance charts in June 2024. Northern Arc Investment Managers emerged as one of top performer, with its IFMR Fimpact Long Term Credit Fund and Income Builder Fund Series II delivering impressive returns of 11.92% and 10.30%, respectively. Vivriti Asset Management also showcased best results, with its Alpha Debt Fund - Enhanced leading the pack at 12.88% Its Alpha Debt Fund and Emerging Corporate Bond Fund clocked more than 9% each in June 2024.
The robust performance of these debt-focused funds suggests a favourable environment for fixed-income investments during the month. However, it's important to note that not all debt funds performed equally well. Northern Arc Investment Managers' Money Market Alpha Fund (0.79%) and WhiteSpace Alpha's Fund 2 - Debt Plus (1.05%) highlight the diverse strategies and risk-return profiles within the debt AIF space.
Additionally, StepTrade Share Services' Chanakya Opportunities Fund, categorised under CAT II - SME, achieved a commendable 7.00% return, indicating potential growth in the small and medium-sized enterprise sector.
Takeaway
In June 2024, Category III AIFs showcased a tale of contrasting fortunes. Long-only strategies thrived, driven by robust performance from funds. Conversely, long-short strategies faced headwinds, struggling to navigate market volatility. In Category II, some debt-focused AIFs delivered exceptional returns, outshining their peers.
The immediate future of the Indian stock market hinges on Q1 FY25 earnings and the Union Budget. Domestic sectors are expected to drive earnings growth, while global sectors may lag. The new government's policies will significantly influence market sentiment, with potential measures aimed at boosting consumption. In the long term, India's economic momentum, fuelled by policy continuity and focus on infrastructure and manufacturing, promises attractive opportunities for investors.
Note:
***Post Exp & Tax
**Post Exp, Pre-Tax
##Gross returns
###Post Exp & Pre Perf.Fees & Tax
^^ Post Exp & Tax and Pre Perf.Fees
Disclaimer: This Blog is made for informational purposes only and does not constitute an offer, solicitation, or an invitation to the public in general to invest in any of the Funds mentioned. All the Returns mentioned in this blog are provided by the respective asset management companies and may vary based on their reporting structure (Pre-tax, Post-tax, Post-expenses, etc.) PMS Bazaar has taken due care and caution in the compilation of data and information. However, PMS Bazaar doesn’t guarantee the accuracy, adequacy, or completeness of any information. Investors must read the detailed Private Placement Memorandum (PPM), including the risk factors, and consult your Financial Advisor before making any investment decision/contribution to AIF. This Blog has been prepared for general guidance, and no person should act upon any information contained in the document. PMS Bazaar, its affiliates, and their office, directors, and employees shall not be responsible or liable for any investment action initiated. This Blog is intended only for the personal use to which it is addressed and not for distribution.
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Category 3 AIFs experienced a performance divide in July 2024. Long-short AIFs lagged, posting an average return of 2.44%. Conversely, Long-Only AIFs thrived, achieving an average return of 4.41%, successfully leveraging positive market trends.