Investing in the stock market can be an exciting and potentially lucrative endeavour. It can also be overwhelming and confusing, especially for beginners.
One of the most important decisions that an investor needs to make is choosing an investing style in AIF investing. The AIF performance and style should be compatible with their goals, risk tolerance, and personal preferences.
In this article, we will explore the top investing styles: value, growth, and contrarian. We also throw some light on several important tips on how to choose the most suitable one.
Let’s start.
Top investing styles:
Value investing:
Value investing is an investing style that focuses on buying stocks that are undervalued by the market. Style investors believe that the market sometimes misprices stocks, creating opportunities to buy quality stocks discounted.
The goal of value investing is to identify stocks that are trading below their intrinsic value and hold them for the long term until the market recognizes their true worth.
Value investors use fundamental analysis to identify undervalued stocks. This analysis includes looking at a company’s financial statements, earnings growth, and cash flow.
Value investors also look for stocks with a low price-to-earnings ratio (P/E ratio), a low price-to-book ratio (P/B ratio), and a high dividend yield.
Growth investing:
Growth investing is an investing style that focuses on buying stocks of companies with high-growth potential.
These investors believe that investing in companies that have the potential for above-average growth can generate higher returns. This is relatively higher than investing in established companies with steady but slower growth rates.
Growth investors use various metrics to identify growth companies, including earnings growth, revenue growth, and profit margins. Growth investors also seek companies with a high price-to-earnings ratio (P/E ratio) and a high price-to-sales ratio (P/S ratio). These are indicators for comparing AIF for high-growth potential.
Contrarian investing:
Contrarian investing is an investing style that goes against the prevailing market sentiment. Contrarian investors believe that the market often overreacts to news, creating buying opportunities when the market is overly pessimistic about a particular stock or sector.
These investors look for stocks that are out of favour with the market, typically due to negative news or events. These stocks are often trading discounted compared to their historical prices and may be undervalued.
This type of AIF performance investors use fundamental analysis to identify stocks that are oversold by the market. These stocks have a strong potential for a rebound in general.
How to choose the most suitable AIF investing style?
Alternative Investment Funds (AIFs) are gaining popularity among investors. This branch of investment offers a variety of investment options outside the traditional equity and debt instruments.
However, with so many AIF investing styles available, it can be confusing to select the most suitable one for you.
- Understanding AIF investing styles:
Before we dive into the selection process, it’s important to understand the different AIF investing styles. AIFs are broadly classified into three categories: hedge funds, private equity funds, and real estate funds.
Hedge funds invest in a range of assets such as stocks, currencies, commodities, and derivatives. Private equity funds invest in private companies, while real estate funds invest in real estate assets such as residential, commercial, and industrial properties.
- Determine your investment goals and risk appetite:
The first step in selecting the most suitable AIF investing style is to determine your investment goals and risk appetite. If you’re looking for high returns, hedge funds might be a suitable option for you.
However, if you’re willing to take on a higher level of risk, private equity funds might be a better fit. On the other hand, if you’re looking for a steady income, real estate funds might be the way to go.
- Consider the fund manager’s expertise:
Another important factor to consider when comparing AIF and its investing style is the fund manager’s expertise. Look for a fund manager with a proven track record in the specific investing style you’re interested in.
Additionally, you should consider the fund manager’s experience, reputation, and investment philosophy.
- Analyse the fund’s performance:
Finally, analyse the performance of the AIF before making your investment decision. Look at the fund’s historical returns, volatility, and other performance metrics.
It’s important to remember that past performance is not a guarantee of future performance. Thus, you may need the expert help with this domain.
Below, you see the top AIF funds’ performance for your better clarity and decision-making.
Best performing AIF funds:
The Recognition for The Top 3 Best Performing Long Only AIF in April 2023
(Based on last 3 years of performance)
| AMC & Scheme Name | Inception Date | Overall Performance (%) (3Y) |
| Aequitas Equity Scheme I | Mar-19 | 73.11% |
| Abakkus Emerging Opportunities Fund | Jun-19 | 53.8% |
| Abakkus Growth Fund 1 | Jul-18 | 41.6% |
The Recognition for The Top 2 Best Performing Long short AIF in April 2023
(Based on last 3 years of performance)
| AMC & Scheme Name | Inception Date | Overall Performance (%) (3Y) |
| ICICI Prudential Long Short Fund – Series I | Aug-18 | 14.13% |
| Avendus Absolute Return Fund | Mar-17 | 11.34% |
Parting note:
Choosing the most suitable fund involves a thorough understanding of AIF performance and the fund manager’s expertise. By taking these factors into consideration, you can select an AIF that aligns with your investment objectives.
You may like to consult AIF & PMS Experts India Pvt. Ltd. to get the favourable return on your investment. You can directly call them at 8368586435 or establish a communication through mail: [email protected].