HNIs curb flows to long-short AIFs as higher taxation pinches

Sebi data shows that commitments raised by category-III AIFs in September quarter were down 10% QoQ

Alternative investment funds (AIFs), especially those that deploy long and short strategies, are feeling the pinch of higher taxation as commitment to such products from high networth investors (HNIs) is reducing.  

Data sourced from the Securities and Exchange Board of India (Sebi) showed that commitments raised by category-III AIFs in the September quarter had reduced by 10 per cent quarter-on-quarter to Rs 42,223 crore. This was the first quarter of reduction in commitment since December 2012.

“The higher component of taxation for long-short funds has made such products less compelling for clients. Spreads compared to traditional fixed-income products have dipped on account