Long-only alternative investment funds outperform in April, shows data

Long-only strategies – which fall under Category-III alternative investment funds (AIFs) — outperformed long-short strategies in April, giving average category returns of 11.8 per cent, as against 0.6 per cent given by the latter, the data from PMS Bazaar shows.

This was in a period when the benchmark index Nifty50 rallied 14.7 per cent. Experts said, the market uptrend in April benefited long-only strategies, but given the choppy nature of the market, long-short funds could be a better space to be in. Long-short funds try to profit from both rise and fall in asset prices, whereas long-only funds try to buy undervalued assets and gain if the asset price appreciates. In the last three months, however, long-short strategies have done better with returns of -7.5 per cent, compared with -20.1 per cent by long-only funds.

For a one-year period, none of the long-only funds has given positive returns, whereas all but one of the seven long-short funds have posted gains. Alternative Equity Scheme run by Edelweiss Asset Management is the top performer, with 7.2 per cent returns. Long-short strategies involve buying equities that are expected to increase in value and selling short equities that are expected to decrease in value.