Long-Short category average return at 1.64% vs. 1.60% of Long-Only peers

In September 2024, the performance of Category III Alternative Investment Funds (AIFs) reflected a shift from previous months. Unlike earlier trends, both Long-Only and Long-Short strategies posted similar average returns, leaving little room for performance disparity. The 69 Long-Only AIFs returned an average of 1.60%, falling short of benchmarks like the BSE 500 TRI (2.09%) and Nifty 50 TRI (2.28%). 30 offerings beat BSE 500 TRI, while 27 outperformed Nifty50 TRI.

However, Long-Short AIFs, with 33 schemes, clocked a slightly better average return of 1.64%, suggesting that these strategies managed market challenges a tad better. Despite this marginal outperformance, only 7 schemes in this category surpassed the benchmarks, indicating that market dynamics posed challenges to this style equally, if not more.

Top 10 Long-Only Performers

Long-Only AIFs primarily invest in assets with the expectation of their value increasing over time. They focus on buying and holding these assets, aiming to profit from capital appreciation. This strategy is similar to traditional investing in stocks and bonds.

In September 2024, 55 of 69 Long-Only AIFs posted positive returns. While many struggled to beat their benchmarks, yet a few stood out with impressive returns driven by focused strategies and disciplined execution. 

Here is a closer look at the top performers.

Sundaram Alternate Assets Ltd - Opportunities Series - Atlas (6.04%): A multi-cap fund investing across large, mid, and small-cap stocks, focusing on long-term capital appreciation. This fund’s performance highlights the importance of diversification and disciplined sector allocation.

Monarch Networth Capital - MNCL Capital Compounder Fund I (5.70%): This flexi-cap fund blends mid/small-cap biases with high-conviction stock selection, aligning with investor goals and delivering alpha.

Motilal Oswal AMC - Growth Anchors Fund (4.92%): A fund that supports visionary founders in listed and unlisted equities, demonstrating the potential of founder-backed strategies to drive sustainable returns.

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Top 10 Long-Only AIF Performers for September 2024: 

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

Top Long-Short Performers

Long-Short AIFs employ a more complex strategy that involves both buying and selling assets simultaneously. They identify undervalued assets to buy (long positions) and overvalued assets to sell (short positions). The goal is to profit from both the rise in the value of the long positions and the decline in the value of the short positions. This strategy allows for potential profits in both rising and falling markets.

In September 2024, 31 of 33 Long-Short AIFs posted positive returns. Long-Short AIFs maintained a similar performance to Long-Only peers. But, Long-Short (7 of 33 i.e. 21%) did not match Long-Only peers (30 of 69 i.e. 43%) in terms of beating the BSE 500 TRI benchmark. 

The following strategies achieved notable results.

Altacura AI - Maximus Fund (4.68%): An innovative strategy leveraging market trends to consistently achieve alpha over the Nifty 50 Index, providing an equity-like risk-return profile with strategic volume management.

Avendus Capital - Enhanced Return Fund 2 (4.35%): This fund seeks to deliver 150% of Nifty returns while limiting the downside to 30% of market losses, ensuring stability during volatile periods.

The third was Consumer Trends from Edelweiss (4.31%). It was followed by Whitespace Alpha - Fund I - Equity Plus (3.09%): Aims to generate alpha through FnO trades, smoothing market volatility while capturing long-term returns from India’s largest companies.

Vasisth Capital—Relative Value Fund (2.98%): This AIF Category III fund aims to offer attractive absolute returns and diversification into market-neutral investments.

Top 5 Long-Short AIF Performers for September 2024

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

Category II AIF: Top performance

Debt-focussed category II AIFs delivered robust returns in September 2024. The Vivriti Emerging Corporate Bond Fund led with a remarkable 14.13% return, demonstrating the strength of corporate credit strategies.

In 2nd rank is Northern Arc Investment Managers' IFMR Fimpact Long Term Credit Fund with 12.52%. They are followed by Vivriti Asset Management's Alpha Debt Fund - Enhanced (10.58%), Vivriti Asset Management's Alpha Debt Fund (9.89%), StepTrade Share Services' SME-focussed Chanakya Opportunities Fund (2%), amongst others.

Conclusion 

In September 2024, both Long-Only and Long-Short AIFs delivered comparable results, with neither strategy significantly outperforming the other. Long-Only funds saw fewer outperformers (30 in Sept. vs. 56 in Aug.) than usual, suggesting market conditions challenged even focused strategies. Meanwhile, some Category II debt AIFs continued to shine bright, delivering stable and attractive yields.

Investors can find value across equity and debt strategies, with funds demonstrating resilience and adaptability in uncertain market conditions.

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.