Most category III alternative investment funds have underperformed the benchmark Nifty in the month of September.

Long-only funds gave average category returns of 1.46 per cent while long short funds returned 1.13 per cent on average, the data from PMS Bazaar for category III AIFs showed. The Nifty was up 1.99 per cent during the month.

Of the 61 long-only funds, 50 funds gave positive returns, while 11 schemes gave negative returns. All of the 20 long-short funds ended in the green. Fifty of these 81 schemes underperformed the benchmark Nifty.

First Water Capital Fund was the best performer in September, with returns of 5.5 per cent. 360 One Asset Management’s Turnaround Opportunities Fund was the second best performer with returns of 4.9 per cent, followed by Nippon India’s Reimagine India Opportunity 7, which returned 4.6 per cent.

Best performers

For the one-year period, Aequitas Equity Scheme I was the best performer with returns of 82.9 per cent. Abakkus Asset Manager’s Emerging Opportunities Fund I and First Water Capital Fund were the other two top performers for the one-year period, with gains of 51.5 and 46.9 per cent, respectively.

Among the long-short funds, Dolat Absolute Return was the top performer in September with returns of 2.6 per cent. Whitespace Fund 1 - Equity Plus has topped the charts for a one-year period with returns of 27.2 per cent.

The broader markets S&P BSE Midcap and S&P BSE 250 SmallCap were up by 3.6 per cent and 1.9 per cent, respectively. PSUs (11 per cent), power (7 per cent) and metals (6 per cent) were the top sectoral gainers. Foreign portfolio investors saw net outflows of about $1.8 billion in September, while domestic institutional investors saw net inflows totaling about $2.4 billion.

Indian markets have been resilient in the face of amid global challenges, following a hawkish commentary by US Federal Reserve, rise in crude prices and heightened geopolitical tensions.

Classic dichotomy

“A strong domestic macro and an equally worrying global scenario has led the markets to a classic dichotomy situation. The recent global events and the ensuing earnings season will drive the market movement in the current month. Momentum should abate a bit and allow opportunities for longer term investors to gradually build their portfolios,” said Sunil Singhania, founder, Abakkus Asset Manager, in a recent note to investors.

A long-only fund takes only long positions. A long-short fund takes both long and short positions in the market and use several alternative investing techniques such as leverage, derivatives, and short positions to purchase relatively undervalued securities and sell overvalued ones.