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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 16, 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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