The month of April saw AIF bounce back strongly after a relatively moderate showing in March. Key indices were up reasonably during the month. The Nifty TRI was up 1.24% during the month, while the broader market BSE 500 TRI delivered a stronger 3.44%.

The entire category 3 long-only Alternative Investment Funds (AIFs) pack went past the key benchmark, Nifty 50 TRI, while most outperformed the BSE 500 TRI in April.

Among the top 10 funds in the category, many strategies managed to give double-digit returns and many times the returns of the standard benchmarks during the month.

Category 3 long-only funds seek to invest in companies traded in the exchanges and are available with ample liquidity. They do not have any serious mandate restrictions and are thus unrestrained in their stock choices based on the fund manager’s view of the markets. 

During the month, all 67 category III long-only funds managed to outperform the Nifty 50 TRI, while 59 strategies delivered better returns than the BSE 500 TRI. 

The long-short category’s performance was a bit mixed. We had 14 such funds delivering more than the Nifty 50 TRI. Against the BSE 500 TRI, 4 funds outperformed in April.

Closed-ended funds did very well in the long-only category with six of the top 10 being such schemes. However, open-ended strategies continued to dominate the toppers’ chart in the long-short category during the month with nine in the top 10.

Top 10 long-only performers 

In April, the top long-only funds delivered much higher returns than the standard benchmarks – Nifty 50 TRI and BSE 500 TRI. The category delivered strongly with 6.52% returns in the month.

As mentioned earlier, six of the top 10 long-only funds were closed-ended, while the remaining three were open-ended. 

Here is the list of the top 10 funds in the category 3 long-only funds segment.

Taking the top position was the Finavenue Growth Fund from A8 Finsight with 19.26% returns for the month. 

Samvitti Capital’s Alpha Fund came second with 12.74% returns in April. The fund seeks to generate absolute returns by positioning itself on the long and short sides of the markets with different strategies.

D&B India Opportunities Multi-cap Fund from Dalal and Broacha Stock Broking took the third spot with 11.4% returns during the month.

Rational Equity Trust’s Rational Equity Flagship Fund I came fourth with 11.34% returns in April. The fund takes a flexicap and sector-agnostic approach to selecting stocks.

Taking the fifth position was the First Water Capital Fund with 11.14% returns in the month. 

The category’s performance vis-à-vis the Nifty 50 TRI and BSE 500 TRI are depicted below.

The performances of the top 10 long-only funds and the comparison with Nifty 50 TRI and BSE 500 TRI for April are depicted below.

Top 5 long-short funds

Long-short funds use complicated investment strategies. They try to factor in several quantitative and qualitative metrics to decide their portfolio picks and use sophisticated strategies involving derivatives and equities. These long-short funds look to reduce portfolio volatility while ensuring healthy and steady returns over the medium to long term. 

In April, funds in the segment gave 2.01% on average. As many as 14 funds outperformed the Nifty 50 TRI, while four went past the Nifty 50 TRI. Barring one, all the other top funds were open-ended.

The top five long-short AIF schemes for the month of April are depicted below. 

Nuvama Asset Management’s Enhanced Dynamic Growth Equity fund was the chart-topper with 5.3% in April. The fund seeks to manage fluctuations by cushioning the portfolio during falls and then providing alpha over the long term.

The optimal equity fund of SBI Funds Management took the second position with 5.2% returns in the month. This strategy looks to invest in companies with improving fundamentals.

Volvin Growth fund – Active Rabbit came third in April with 3.96% returns. The fund uses fundamentals for equity selection and also deploys derivatives to hedge the portfolio.

The India Long Short fund from Helios Capital Asset Management came in fourth with 3.54% returns in the month.

Edelweiss Asset Management’s consumer trend fund took the fifth spot during the month with 2.73% returns.

Takeaway 

April turned out to be one solid month for investment products across the spectrum. Even though index movements were moderate to reasonable, AIFs delivered spectacular performances during the month. Despite FIIs not taking enthusiastically to participate in the market rally, DIIs were fully in to support stocks across the board.

However, uncertainties loom large for the neat term. Valuations in mid and small cap segments have risen sharply, raising concerns on over how much legs they have for the time being.

The Federal Reserve’s ‘higher for longer’ interest rate regime is also expected to weigh in on global central bank action. Domestically, even the RBI continues to focus on the withdrawal of accommodation and thus has kept a tight leash on interest rates. Election outcomes and corporate results are immediate concerns on the horizon. Increased volatility may push the action more towards the derivatives market.

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.