NEIL BORATE : Most Indian investors are familiar with equity mutual funds which deliver returns when stock prices rise.
However some funds aim to make money when stocks fall or rise. These funds are also allowed to borrow money to invest. Such funds are categorized as Category III Alternative Investment Funds (AIFs) by SEBI and in colloquial terms are called 'hedge funds'.
In this piece we look at how hedge funds have performed and whether there is an investment case for them. According to data from PMS AIF world, an alternative funds platform, the top 8 hedge funds in India delivered an average return of 6.45% in FY 20, compared to the -26% given by the benchmark Nifty 50.