Most long-short alternative investment funds (AIFs) outperformed the Nifty in the month of May. The former gave average category returns of 0.8 per cent compared with -0.33 per cent given by the benchmark, data from PMS Bazaar for category-III AIFs showed.
Ambit 365 and AlphaMine Absolute Return Fund were the top performers among long-short funds with returns of 2.9 per cent and 2.8 per cent, respectively.
Long-only funds, on the other hand, struggled and gave average category returns of -0.8 per cent. Twenty eight out of the 61 long-only funds underperformed the benchmark Nifty. ICICI Prudential AMC’s Growth Leaders Fund 3 and Emerging Leaders Fund were the top performers with returns of 4.1 per cent and 3.96 per cent, respectively.
The month of May saw a lot of volatility with the Nifty VIX seeing a spike ahead of the general elections. The markets have since stabilised on hopes of political stability and continued reforms.
For the one-year period, Prudent Equity’s ACE Fund was the top performer with returns of 94.4 per cent. Rational Equity Flagship Fund I and Samvitti Capital’s Alpha Fund were the other two top performers, with gains of 89.6 per cent and 85.9 per cent, respectively.
Long-only funds have comfortably outperformed long-short funds over a one-year period, with average category returns of 43.5 per cent compared with 18.7 per cent.
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.