Long-Short AIFs fall less than benchmarks amid market turbulence

October 2024 saw a dramatic shift in market sentiment, as key indices tumbled, leaving investors grappling with uncertainty. Multiple factors weighed on markets such as sell-off by foreign investors, muted quarterly earnings, uncertainty over US President poll outcome and geopolitical tensions in Middle-East and Ukraine. The BSE 500 TRI dropped by 6.45%, while the Nifty 50 TRI fell 6.12%. In this challenging environment, Category-III AIFs dealt with pressure better. Long-Short strategies, with an average return of -2.18%, fared relatively well, with 29 out of 34 funds surpassing benchmarks. In contrast, Long-Only AIFs averaged -3.27%, with 66 out of 72 schemes still managing to beat the BSE 500 TRI. Both AIF categories on average return basis did better than pure-equity benchmarks, showing that alternative investment funds can act as wealth protectors during severe market decline periods.

Top-10 Long-Only Performers

Category-III Long-Only AIFs aim to deliver positive returns by holding long positions in selected stocks. These funds invest with the expectation of capital appreciation, similar to traditional equity investing but within a focussed AIF structure. In October, the category's average return stood at -3.27%, with 69 funds out of 72 outperforming the BSE 500 TRI and 66 exceeding the Nifty 50 TRI.

Here’s a look at the top 5 performing strategies for this month.

Generational Capital Breakout Trust - Breakout Fund 1

October 2024 Return: 9.72%

Alpha over Nifty 50 TRI: 15.84%

This fund adopts a breakout strategy, focussing on high-growth companies poised for significant price movements, capitalising on key technical and fundamental trends.

Valuequest Investment Advisors Pvt Ltd - VQ FasterCAP Fund

October 2024 Return: 5.90%

Alpha over Nifty 50 TRI: 12.02%

The strategy emphasises rapid capital appreciation through a mix of high-conviction mid and small-cap stocks, delivering strong returns even in volatile markets.

A9 Finsight Pvt Ltd - Finavenue Growth Fund

October 2024 Return: 3.56%

Alpha over Nifty 50 TRI: 9.68%

This fund focuses on growth stocks across various sectors, identifying companies with exceptional scalability and profitability potential.

Accuracap - AlphaGenNext Fund

October 2024 Return: 2.50%

Alpha over Nifty 50 TRI: 8.62%

Targetting next-generation industries, this fund seeks investments with high growth prospects in emerging sectors, underpinned by strong fundamentals.

StepTrade Share Services Pvt Ltd - Revolution Fund

October 2024 Return: 2.00%

Alpha over Nifty 50 TRI: 8.12%

A diversified fund that strategically allocates across large-cap and mid-cap stocks, positioning itself for consistent long-term growth while navigating market volatility.

Top 10 Long-Only AIF Performers (October 2024)

The Long-Only AIF category’s performance compared to benchmark indices is depicted below.

Top-10 Long-Short Performers

Category-III Long-Short AIFs combine long and short positions to generate returns, even in declining markets. These funds aim to capitalise on both rising and falling assets, offering a hedged approach to volatility. In October 2024, Long-Short funds averaged a return of -2.18%, with 29 out of 34 funds surpassing the BSE 500 TRI and Nifty 50 TRI benchmarks.

Here’s a look at the top 5 performing strategies for this month.

Neo Asset Management Pvt Ltd - Treasury Plus Fund

October 2024 Return: 1.17%

Alpha over Nifty 50 TRI: 7.29%

This fund blends systematic market trend-following strategies with targeted equity investments, maintaining stability during market swings.

Swyom Advisors Ltd - India Alpha Fund

October 2024 Return: 1.09%

Alpha over Nifty 50 TRI: 7.21%

By focussing on undervalued opportunities and shorting overvalued stocks, this fund effectively captures alpha, even in a negative market environment.

Altacura AI - AI Absolute Return Fund

October 2024 Return: 1.06%

Alpha over Nifty 50 TRI: 7.18%

Leveraging artificial intelligence, this fund employs advanced algorithms to identify mispriced assets, yielding strong returns despite market volatility.

ASK Long Short Fund Managers Pvt Ltd - ASK Absolute Return Fund

October 2024 Return: 1.06%

Alpha over Nifty 50 TRI: 7.18%

A robust strategy that strategically combines long and short positions across sectors to protect against market declines while maintaining upside potential.

Inquant Systematic Investment Managers LLP - Inquant Debt Plus

October 2024 Return: 0.93%

Alpha over Nifty 50 TRI: 7.05%

This fund’s hybrid strategy mixes debt instruments with equity exposure, ensuring downside protection while capturing growth opportunities.

Top 10 Long-Short AIF Performers (October 2024)

The Long-Short AIF category’s performance compared to benchmark indices is depicted below.

Conclusion

October 2024 presented a challenging environment for both Long-Only and Long-Short Category-III AIFs, with market benchmarks showing steep declines. However, Long-Short funds demonstrated greater resilience, outperforming Long-Only strategies, with both categories delivering negative returns. Amidst the turbulence, a few AIFs shone through, showcasing strategic agility and strong execution. For investors, this period underscores the importance of flexibility and diversification in AIF strategies.

Allocating capital to AIFs with a long-term view allows investors to diversify their portfolios and access strategies tailored to personal risk tolerance and financial goals. AIFs offer opportunities in specialised assets or active management, which can outperform traditional investments over time. By aligning investments with individual objectives, investors can navigate market volatility while working toward steady wealth creation. A disciplined, long-term approach ensures that risks are managed, and returns are optimized for future financial security.

Disclaimer: Investments in Alternative Investment Funds (AIFs), including Fund of Funds (FoF) under Category II AIFs, are subject to market risks, liquidity constraints, and regulatory frameworks as prescribed by SEBI. These investments are intended for sophisticated investors with a high-risk appetite and may not be suitable for all. Past performance does not guarantee future returns, and investors are strongly advised to conduct independent due diligence and seek professional financial advice before investing. Do not consider it as solicitation neither from singularity nor pmsbazaar