Most long-only alternative investment funds have outperformed Nifty in the month of July. The former gave average category returns of 5.7 per cent compared with 2.9 per cent for the benchmark, as the data from PMS Bazaar for category 3 AIFs showed. Long-short funds gave average category returns of 1.6 per cent.
Of the 61 long-only funds, all except seven managed to beat the Nifty50 returns of 2.9 per cent during the month, while only five out of the 20 long-short funds beat the benchmark.
Aequitas Equity Scheme I was the best performer in July, with returns of 15.3 per cent. Malabar Value Fund was the second-best performer with returns of 14.6 per cent, followed by I Wealth Fund 2, which returned 12 per cent.
Top performers
For the one-year period, Aequitas Equity Scheme I was the best performer, with returns of 75 per cent. Abakkus Asset Manager’s Emerging Opportunities Fund I and Oculus Capital Growth Fund were the other two top performers for the one-year period, with gains of 40.3 per cent and 37.8 per cent, respectively.
Among the long-short funds, Volvin Growth Fund — Active Rabbit was the top performer in July with returns of 4.2 per cent. For a one-year period, Whitespace Alpha’s Whitespace Fund 1: Equity Plus has topped the charts with returns of 26 per cent.
The broader markets, S&P BSE Midcap and S&P BSE 250 SmallCap, were up 5.7 per cent and 7.4 per cent respectively, in July. Foreign portfolio investors (FPIs) invested $5.7 billion during the month, while domestic institutional flows were marginally negative to the tune of $0.3 billion. The pharma sector was the top performer, with the index rising 9 per cent, followed by the PSU, power, and real estate sectors.
The market has had a strong run-up since April, and there is a fair chance that it can take a breather at current levels, said Sunil Singhania, founder of Abakkus Asset Manager, in a recent note to investors. He reckons valuations are 10 per cent higher than the long-term average, and any correction might be short and swift.
“While maintaining our strong and positive view on Indian equities, we would continue to advise restraint. FOMO (fear of missing out) is high, and momentum and theme-based stock movements have been very prevalent. We would advise discipline and staying away from greed-based investing in the current optimistic scenario,” Singhania said.
A long-only fund takes only long positions. A long-short fund takes both long and short positions in the market and uses several alternative investing techniques, such as leverage, derivatives, and short positions, to purchase relatively undervalued securities and sell overvalued ones.