Close-ended alternative investment funds outperform: PMSBazaar data

Alternative investment funds (AIFs) with a lock-in performed better than those in which investors can withdraw capital at any time. It comes in a month when stock market indices have hit all-time highs.

Close-ended schemes had a median return of 2.1 per cent in September, according to data from tracker PMSBazaar.

The median returns for open-ended schemes was 1 per cent. The S&P BSE Sensex hit an all-time high of 67,838.63, while the Nifty50 index hit 20,192.35 in September.

An alternative investment fund (AIF) is a sophisticated investment vehicle for the wealthy, which typically has a minimum investment of Rs 1 crore. The analysis above looked at Category III AIFs, which invest in equity markets.

It considered schemes across strategies including long-only funds which invest on the markets going up, and long-short funds which can bet on market direction either way.

The returns over benchmark indices were marginal in the case of key categories. Long-short funds had lower returns than the S&P BSE Sensex. Long-only funds did marginally better.

The Nifty 50 index was the best performer. Its two per cent returns were higher than the median returns of any fund category. This would mean the average investor would have made more money in an index fund replicating the Nifty than in an AIF, though these returns are over a relatively short-period of time.

Some schemes have outperformed. Around 27 schemes out of 61 in the long-only category gave returns of between 2.1 per cent to 5.5 per cent.

With returns of between 2.3-2.6 per cent, only 2 out of 20 schemes in the other categories outperformed the Nifty 50 index.