Category 3 AIFs showed mixed results in May 2024. Long-only AIFs averaged -0.08% due to market volatility, underperforming market benchmarks. However, some long-only funds did outperform, averaging 0.82% thanks to their ability to manage risk during volatility.

In May 2024, Alternative Investment Funds (AIFs) in Category 3 showcased mixed performance across their long-only and long-short strategies. 

Long-only AIFs performance remained flat with average returns of -0.08%, while the BSE 500 TRI and Nifty 50 TRI gave returns of 0.83% and 0.03%, respectively. This is mainly on account of the volatile market during May 2024. Among the 68 long-only funds, 36 funds have beaten the Nifty 50 TRI while 24 funds have beaten BSE 500 TRI. The closed-ended funds under this category performed better than open-ended funds. 

In contrast, long-short AIFs performed relatively better, with an average return of 0.82%. Their ability to hedge positions and adjust exposures, allowed them to mitigate risks and capitalise on market fluctuations. 

Top 10 Long only performers 

Despite favourable performance from key indices, most Category 3 long-only AIFs underperformed in May 2024, resulting in an average return of -0.08%. 

ICICI Prudential AMC Ltd secured the top two positions, with its Growth Leaders Fund - 3 delivering a 4.07% return and its Emerging Leaders Fund with a return of 3.96%. 

Taking the third position was Alchemy Capital Management's Emerging Leaders of Tomorrow strategy with a 3.63% return. 

Fourth place is secured by Samvitti Capital’s Alpha Fund approach with a return of 3.45%. 

In the fifth spot is Alchemy Capital with Leaders of Tomorrow strategy delivering a return of 3.27%. 

These funds showcased strong performance, significantly outpacing the average returns and the benchmarks. This indicates that while the overall category struggled, certain strategies and fund managers were able to deliver exceptional returns.

The category's performance compared to benchmark indices are depicted below

Long-short performance 

Long-short funds use complicated investment strategies, factoring in multiple quantitative and qualitative factors, this then goes into picking stocks in their portfolio. These funds use sophisticated strategies involving derivatives and equities to reduce portfolio volatility for stable returns. In May, the Long-Short category’s average return was 0.82%. Out of 29 schemes, 26 outperformed the Nifty 50 TRI (0.03%), and 17 outperformed the BSE 500 TRI (0.83%). 

The top performer in the long-short category was Ambit Investment Advisors' Ambit 365 strategy delivering a return of 2.90%.

Following closely, AlphaGrep Investment Management secured with its AlphaMine Absolute Return Fund, achieving a 2.80% return. 

Vasisth Capital claimed third place with its Relative Value Fund, which posted a return of 2.39%.

Here is a table with the top 5 long-short funds

Here is how it compares with the benchmark indices 

Takeaway 

The stock market in May 2024 witnessed volatility and the same was reflected in the performance of AIFs as well. Multiple factors including global economic headwinds, valuation concerns on mid and small cap stocks, uncertainty on election results, and foreign investor outflows among others had an impact on the market. 

That said, the coming months appear optimistic. With election result uncertainty out of the way in June, the market will start focusing on earnings. The cabinet formation following the election result could bring significant policy changes is a key monitorable. This apart, the upcoming July budget session and the progress of the monsoon could influence the market trajectory. 

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.) PMSBazaar 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.