market crash: Crorepati investors lose up to 16% in May’s market selloff, shows AIF data

It’s not just retail investors who have burned their fingers in stocks in the market’s ongoing painful phase, even some of India’s ultra-wealthy and sophisticated crorepati investors who rely on AIFs or alternative investment funds have lost up to 16 percent of their assets in the stock market alone. May.

Data from PMSBazaar showed that the closed-end Malabar Value Fund of Rs 420 crore was the biggest loser among AIFs, reporting a 15.76 percent decline in May. The Sunil Singhania-led Abakkus Asset Managers’ Emerging Opportunities Fund-1 also reported a monthly negative return of 10.9 percent. Funds managed by Nippon India, Aequitas Equity Fund, Sageone and Alchemy were also among the biggest losers on the monthly charts.

None of the AIF funds in the Long Only category delivered a positive return.

While the headline index Nifty50 lost 3.03 percent in May, the sell-off in the broader market was sharper. Nifty Midcap 100 lost 5.33 percent and Nifty Smallcap 100 lost 10.2 percent during the period. Since then, the indices have hit a 52-week low.

Unlike mutual funds and even PMSs (portfolio management services), Category III AIFs are allowed to employ complex trading strategies for sophisticated investors willing to invest at least Rs 1 crore in high yield and risky bets. The Sebi rules allow AIFs to use leverage, including by investing in listed and unlisted derivatives.

However, in the month of May, AIF schemes using a long short strategy outperformed, with some even delivering positive returns. ITI Long Short Equity Fund was the best performing in the pack. AIF funds from the stable of Tata, Altacura AI Absolute Return Fund, Vasisth Capital, Avendus and

also managed to close May in green.

Explaining the reason behind the outperformance, Ajay Vaswani, Senior Vice President, ITI Long Short Equity Fund, told ETMarkets that their net equity exposure averaged just 16 percent last month. “For the past six months, we have maintained a cautious stance on the back of rising inflation and higher interest rates. The long short strategy has helped us limit the downtrend while also leveraging the upward momentum,” he said.

If you look at last year’s returns, crorepati investors have managed to beat the index. While the Nifty is down about 2.5 percent in the past year, AIF funds have seen impressive returns of up to 46 percent, with Aequitas Equity Fund leading the way.

Other winning funds include Roha Emerging Companies Fund, Alchemy Capital’s Leaders of Tomorrow and First Water Capital Fund with returns ranging between 21-29 percent.

(Disclaimer: The experts’ recommendations, suggestions, views and opinions are their own. They do not represent the views of Economic Times)

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