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MF News AIF industry nearly doubles in size in last one year

AIF industry nearly doubles in size in last one year

A majority of the of industry’s assets (64%) is in category II funds.
Shreeta Rege Jun 15, 2018

Alternative investment funds (AIFs) have grown substantially - by 96% in the last financial year. The commitments raised (roughly equivalent to AUM in MF parlance) increased from Rs.84,304 crore to Rs.1.65 lakh crore, shows the latest data by SEBI.

Investors continue to lap up category II funds such as private equity and debt funds, investing Rs.54,064 crore in the category. These funds offer exposure to assets in which traditional mutual funds schemes do not invest.

Rohit Gulati, Managing Partner, UTI Capital mentions that as majority of the funds in this category invest in private debt, these provide debt investors with an opportunity to invest in schemes running competitive portfolio structures. “As private debt funds provide customised loans to corporates, it allows the schemes to charge a premium which is not possible in the case of traditional debt investments.” Increasingly, debt investors are considering category II funds for investments. This has helped the category to grow by 105%.

Category III AIFs, which are essentially hedge funds, have also recorded an exponential increase, growing by 161% in the last one year. These funds deploy a variety of strategies like long and short strategy, IPO focussed investments, running a concentrated portfolio to generate performance. Nalin Moniz, Fund Manager, Edelweiss Alternative Equity Scheme believes that investors are considering category III AIFs due to their performance. “AIFs have delivered good risk-adjusted returns. Additionally, these funds are attractive investment avenues as they club the operational ease of a mutual fund with the flexibility of a PMS. Thus, clients and advisors are starting to make these funds a core part of their asset allocation.”

Category I funds meanwhile grew at a modest pace collecting Rs. 7,435 crore. The category consists of infrastructure funds, social venture funds, angel funds or VC funds.  

Categories

Commitments raised as on date

in (Rs. crs.)

Change

(Rs. Crs.)

Percentage growth

Category-wise market share

31st March 2018

31st March 2017

Category I

28036

20601

7435

36%

17%

Category II

105799

51734

54064

105%

64%

Category III

31261

11969

19292

161%

19%

Total

165095

84304

80791

96%

100%

 

Source: SEBI

In terms of share, a majority of the of industry’s assets (64%) is in category II funds. The remaining assets are divided between category III (19%) and category I (17%).

Category-wise market share of funds

 

 

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