The Alter-NATIVE series ‘AIFs can help advisors cater to diverse needs of HNIs’

‘AIFs can help advisors cater to diverse needs of HNIs’

Nalin Moniz - Chief Investment Officer - Alternative Equity of Edelweiss , talks to Cafemutual on why advisors should consider adding AIFs to their offerings and why HNIs’ appetite for AIFs is growing.
Nishant Patnaik Jul 4, 2017

How is the appetite for AIFs among Indian HNIs?

HNIs tend to chase stable returns, which they expect to find in AIFs. Since the equity market is a bit volatile, HNIs have moved to other asset classes, like alternative investments. HNIs are finding such schemes lucrative.

SEBI data shows that all categories of AIFs have witnessed impressive growth in their assets under management over the last three years. The growth was largely due to rising interest of HNIs in private equity and debt funds.  

Let us start with the basics. Which investor needs do AIFs meet?

As the name suggests, AIFs are alternative to traditional investments. It has low correlation to traditional investments. Here investors can invest in innovative and unexplored ideas to earn better risk-adjusted returns. AIFs can invest in both listed as well as unlisted securities.

AIFs are customised and provide more flexible portfolios. Fund managers can take a call depending on the prevailing market conditions.

Why should financial advisors look at AIFs to add to their offerings?

Investment Advisors dealing with HNI clients should consider adding AIFs to their offerings. It can help them cater to the diverse needs of their HNI clients. AIFs can provide diversification to their offerings. AIFs are in better position to deliver risk-adjusted returns.

How do you plan to stand out from the crowd, especially when it comes to fund management?

Edelweiss’ strength has been managing its own proprietary capital and advising clients on alternative ideas through its wealth management and institutional equities business. This institutional pedigree has helped us stand out in fund management.

Give us an overview of how big is the private equity market globally.

The private equity market assets under management is currently $2.5tn. The industry currently has a dry powder of around $820bn.

What is the size of Indian private equity market currently and how big it is estimated to grow in future?

The private equity investments Is about $130 – 140bn in India so far have been around $140bn. We have been witnessing about $15 – 20bn of additional private equity investments coming into India on an annual basis. So it is currently growing at around 12 – 15% on an annual basis.

What is required to make AIFs more popular in India?

Uniform taxation for AIFs would make it attractive for investors in India. Currently, different funds have different tax structure. A pass-through status to AIFs just like mutual funds can help reduce ambiguity in the tax structure and give more clarity to investors on post-tax returns.

There has been a concern among investors on the transparency of AIFs. How often do you disclose the portfolio to investors?

We are adequately transparent. We send details of our top holdings on a monthly basis with a detailed attribution of performance.

How do you see new asset classes like REITs and InvITs as an investment option? How do you plan to take exposure to these new instruments?

We are quite optimistic about both REITs and InvITs. These instruments can provide higher yields than traditional fixed income markets. Going forward, these instruments may prove to be good investments considering the improving macro-economic indicators. However, we will participate in such issues depending on our internal research.


Past performance is not an indication of future performance. Investments in the securities market are subject to market risk.

Please read the Private Placement Memorandum carefully before investing.

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