With increasing numbers of skilled investors investing in alternative investment vehicles, there has been a drastic transformation of the Indian investment environment. Since the emergence and regulation of the Securities and Exchange Board of India (SEBI) for the creation and management of funds, Alternative Investment Funds (AIFs) have formed a key component of wealth management and portfolio diversification strategies. The long-term approach and broad coverage of assets in both Categories I and II AIFs have attracted considerable amounts of capital from high net worth individuals (HNIs), family offices, institutional investors, and wealth management firms. This paper seeks to use risk-adjusted performance ratios to measure the investment ranking and evaluate the risk-reward characteristics of Category I and Category II Alternative Investment Funds in India. Secondary data collected from financial databases, trade publications, fund documents, and SEBI reports is used to conduct this analytical research study. The efficiency of investments and comparative performance are measured through various financial performance ratios such as annualized returns, standard deviations, Sharpe ratios, Sortino ratios, betas, and drawdowns. From the above statistics, we see that Category I AIFs have relatively less volatility and higher risk-adjusted performance, while Category II AIFs give high absolute returns due to the presence of private equity, debt, and real estate assets. In addition to helping make investment decisions, the study has provided a structure of comparative rankings by taking into account different risk and return parameters. Analysts, wealth managers, financial advisers, and even investors seeking a systematic approach to alternative investment analysis in India can all find value in the findings of this study. The need for risk-adjusted investment analysis has been increasingly stressed in the context of wealth management, and this paper will contribute to the limited literature in this field.
Jerrin alpha s (Fri,) studied this question.