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At Cafemutual Confluence 2024, Anand Shah, Partner, IPCON shared with us opportunities in distribution of Category II AIFs.
Anand Shah is a Chartered Accountant and Certified Financial Planner. He has 8 years in capital markets.
Anand said that AIFs take care of evolving needs of HNIs and offer them meaningful diversification.
Sharing why he has so much conviction in category II AIFs, Anand said that category II AIFs operate similar to mutual funds by offering unit holding structure, which is not available in PMS. Also, these products give exposure to unlisted securities, which mutual funds and PMS do not offer.
Another key benefit of category II AIF is access to unique investment themes like defence, artificial intelligence and new age technology companies.
Anand feels that AIFs make sense for investors who already have a mutual fund portfolio and want to diversify their investment with a different product. For those aiming for higher returns and willing to accept a lock-in period, AIFs can be a suitable option, said the MFD.
Talking about how he shortlists category II AIFs, Anand told the audience that he regularly interacts with asset management companies that manage AIFs to understand product structure, strategy and underlying framework. He also looks at past track record, uniqueness in offering and fee structure. He also said that clarity in the drawdown schedule also plays a key role in performance of funds.
Anand shared that AIFs can offer alpha in the range of 4-5% over 7-8 years.
In conclusion, Anand said that AIFs offer an edge to the investment portfolio of wealthy clients. Also, exposure to AIFs ensures that there is no overlap in the existing investment portfolio.
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