Passive Funds Struggle in Market Downturn as Active Strategies Outperform

Passive investment strategies have long been perceived as a safer bet, particularly during periods of market downturns. The expectation has been that these funds, particularly low-volatility ones, would provide investors with a cushion against sharp declines. However, recent market corrections have painted a different picture, with passive funds failing to shield investors as effectively as anticipated.

No Downside Protection: The Data Speaks

The NSE benchmark Nifty 50 has witnessed a sustained downturn since reaching an all-time high on September 27, 2024. Investors seeking refuge in low-volatility funds were in for a surprise, as these funds struggled to contain losses.

For instance, from the market peak in September 2024 till February 28, 2025, the Nifty Alpha Low-Volatility 30 Index declined by 24.3%, whereas the Nifty 50 Index fell by 15.6% during the same period. This is contrary to the expectation that a combination of alpha generation and low volatility would provide better downside protection in turbulent times.

Further, other low-volatility indices such as the Nifty Quality Low-Volatility 30 Index and Nifty Alpha Quality Low-Volatility 30 Index also failed to outperform the broader market indices, undermining their premise of offering superior risk-adjusted returns.

Smart Beta Funds: A Flawed Approach?

Unlike traditional index funds that follow a market-cap-weighted approach (such as the Nifty 50), smart beta funds blend passive and active strategies by using alternative weighting techniques to improve returns, lower risk, or enhance diversification.

However, during the recent correction, many smart beta funds underperformed their market-cap-weighted counterparts. The reason could lie in their construction—these indices rely on back-tested data, meaning they are designed based on historical performance. But past volatility trends do not always translate into future performance, which may explain why their expected resilience did not materialise in real-time market stress.

Despite these setbacks, passive investing continues to gain traction, with assets under management (AUM) of index funds and ETFs touching ₹10.91 lakh crore as of January 2025.

Active Strategies Regain Ground

While passive strategies faltered, active funds demonstrated their ability to outperform in certain market segments.

During the recent correction, the active small-cap fund category managed to surpass the Nifty Smallcap 250 Index in terms of average returns. Similarly, some quality-based index funds failed to beat the average returns of actively managed small-cap funds.

In the broader markets, certain flexi-cap and multi-cap funds outperformed the Nifty 500 Index, reinforcing the argument that active management still holds merit in specific market conditions.

That said, long-term performance data suggests that active funds often struggle to consistently beat their benchmarks. According to the SPIVA Global Mid-Year 2024 Scorecard by S&P Dow Jones Indices, 77% of Indian active funds across all categories underperformed their respective benchmarks over a six-month period ending June 2024. This trend has been consistent over the years.

The Proliferation of Smart Beta Funds

The year 2024 saw a surge in the launch of passive investment products, with more than 50% of new funds introduced as index funds or ETFs.

A range of innovative passive products have emerged, including:

  • Equal-weight indices
  • Value-based indices
  • Top 10 equal-weight indices
  • Variants in mid-cap and small-cap indices

However, the sheer volume of new passive funds entering the market has sparked criticism from industry experts, who argue that many of these funds offer little differentiation and may not necessarily enhance investor outcomes.

Active vs Passive: A Balancing Act

The debate between active and passive investing remains ongoing, and the recent correction has reinforced that each strategy has its strengths and weaknesses.

Reports suggest that while the top-performing active funds have managed to outperform passive strategies over the long term, the worst-performing active funds within a category have lagged behind passive alternatives. This underscores the importance of fund selection, as choosing the wrong active fund can lead to disappointing returns.

Conclusion

Investors must weigh the risks and benefits of both active and passive strategies, considering their investment horizon, risk appetite, and fund selection criteria. Market cycles will continue to test these strategies, but the recent downturn has shown that passive funds may not always provide the downside protection that investors expect.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Waaree Technologies Hits 52-Week Low Despite Securing New Order

Waaree Technologies Limited has received a purchase order from Waaree Renewable Technologies Limited for a 20KWh Hybrid system with a 35.84KWh capacity. Despite this development, the stock price of Waaree Technologies hit a 52-week low, reflecting broader market sentiments.

Details of the Order

The order comprises batteries, battery racks, inverters, and solar panels. The execution timeline is set for 1-2 months.

Key Highlights of the Order:

  • Awarding Entity: Waaree Renewable Technologies Limited
  • Nature of the Order: Supply of a 20KWh Hybrid system (35.84KWh capacity)
  • Execution Timeline: Within 1-2 months
  • Value & Consideration: Not disclosed
  • Related Party Transaction: Yes, at arm’s length pricing

The contract is categorised as a domestic order, with Waaree Technologies fulfilling the supply obligations.

Stock Movement & Market Reaction

Despite the announcement of a new order, the stock of Waaree Technologies has hit a 52-week low as it was down by 4.99% and locked at a lower circuit. The fall in the share price indicates that investors may not see this development as a strong growth catalyst. Market participants often consider multiple factors, such as financials, order size, and business outlook, before reacting to such announcements.

Conclusion 

While this order aligns with Waaree Technologies’ focus on hybrid energy solutions, the market response suggests that investors may be looking for larger or more diversified orders to regain confidence. The company’s execution of this contract and future order inflows will likely determine its stock trajectory in the coming months.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Cyient and American Data Solutions Announce Strategic Partnership to Transform Content Management

In a move set to redefine digital content management, Cyient, a global leader in Intelligent Engineering Solutions, has announced a strategic partnership with American Data Solutions (ADS), a leading provider of digital content management solutions. The collaboration aims to transform how businesses create, store, retrieve, and utilise digital content.

The share price of Cyient was trading lower by 1.73% as of 1:36 PM. 

The Vision Behind the Partnership

With businesses increasingly relying on digital content for operations, Cyient and ADS seek to bridge gaps in efficiency, security, and scalability. The partnership leverages Cyient’s deep engineering expertise and global reach alongside ADS’ cutting-edge content management solutions, offering businesses a future-ready and intelligent content ecosystem.

Key Features of the Collaboration

  • Advanced Content Management Solutions: The integration of AI, machine learning (ML), and cloud computing will enable businesses to develop adaptive content strategies that evolve with industry needs.
  • Scalability & Security: ADS’ scalable architecture and robust security features will provide enterprises with seamless content access and management, ensuring data integrity and protection.
  • Enhanced Operational Efficiency: Organisations will benefit from streamlined content workflows, reducing manual effort and boosting productivity.

Leadership Insights

Speaking on the collaboration, Sukamal Banerjee, Executive Director & CEO of Cyient, highlighted how this partnership aligns with the company’s vision for digital transformation: “By harnessing AI, ML, and cloud computing, we aim to create intelligent content management systems that enhance decision-making and efficiency. Our client-centric approach will empower organisations to optimise content strategies and achieve greater business impact.”

Meanwhile, Ran Meriaz, CEO of ADS, expressed enthusiasm about the partnership: “This collaboration with Cyient marks a pivotal moment in redefining content management. Cyient’s global reach and engineering expertise perfectly complement our innovative digital solutions, allowing businesses to achieve new levels of operational efficiency.”

About Cyient

Founded in 1991, Cyient (NSE: CYIENT) is a global leader in engineering, manufacturing, and digital technology solutions, serving over 300 global customers, including 30% of the world’s top 100 innovators. The company is committed to designing an inclusive, responsible, and sustainable future through its innovative solutions.

Conclusion 

As industries continue to shift towards digitisation and automation, Cyient and ADS are positioned to lead the way with intelligent content solutions that drive growth, accessibility, and efficiency. Their combined expertise promises to set new industry benchmarks, ensuring businesses remain competitive in an increasingly digital world.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

RateGain Stock Price Surges Following Partnership with Mews

RateGain Travel Technologies Limited, a provider of AI-powered SaaS solutions for the travel and hospitality sector, has announced its partnership with Mews, a cloud-based Property Management System (PMS) provider. As per the filing, this collaboration aims to streamline hotel operations by integrating RateGain’s Channel Manager with Mews’ PMS.

As of March 4, 12:23 PM, RateGain Travel Technologies Limited is trading at ₹491.35, up ₹9.55 (1.98%) for the day, but down 27.66% over the past month and 39.44% over the past year.

Integration and Functionality

Through this integration, hotels will be able to manage rates, inventory, and reservations across more than 400 distribution channels. The system automates processes such as product creation, mapping, and rate distribution, reducing manual work. The self-serve interface is to allow hoteliers to update pricing and availability across multiple platforms efficiently.

Benefits for Hotels

  • Automated Rate and Inventory Management – The system will help ensure real-time updates across distribution channels.
  • Operations– Hotels can minimize manual input through automation.
  • Revenue Optimization – The integration is to help hotels manage pricing strategies more effectively.

Statements from Companies

Bhanu Chopra, Founder and Managing Director of RateGain, stated that the partnership aligns with the company’s goal of integrating technology to improve hotel operations. Sara Smith, VP of Strategic Partnerships at Mews, mentioned that the collaboration is focused on enhancing distribution automation for hotels.

About the Companies

Mews operates in over 85 countries, serving more than 5,500 hotels. It has received recognition as Best PMS provider in 2024 and 2025 from Hotel Tech Report. The company has also secured funding from investors such as Goldman Sachs Alternatives and Kinnevik.

RateGain works with over 3,200 customers and 700 partners across 100+ countries. Its technology processes travel intent data and transactions for hotel chains, airlines, online travel agencies, and car rental services. The company supports 26 of the top 30 hotel chains and 25 of the top 30 online travel agencies.

Conclusion 

All in all, the hospitality sector continues to adopt AI-driven automation to improve efficiency and revenue management. Partnerships such as this one are part of a broader trend of technology-driven solutions in hotel management.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Govt Pushes Companies to Boost PM Internship Scheme With Dedicated Cells

The Ministry of Corporate Affairs (MCA) has directed companies participating in the PM Internship Scheme (PMIS) to set up dedicated PMIS cells within their organizations. This comes as the scheme’s pilot phase saw a lower-than-expected response, with a major gap between offered and accepted internships.

Low Acceptance Rate in First Round

In the first round of the PMIS pilot phase, companies offered 82,077 internships, but only 28,141 candidates accepted. One of the key reasons is the regional concentration of opportunities, 43% of the internships were in Uttar Pradesh, Andhra Pradesh, Madhya Pradesh, Bihar, and Haryana. Many candidates were reluctant to relocate, particularly due to the low stipend of ₹5,000 per month, along with a one-time relocation allowance of ₹6,000.

Dedicated Cells for Implementation

As per the reports, setting up PMIS cells will help companies assess workforce requirements, manage operational challenges, and develop specialized training programs for interns. Many companies have struggled with implementation due to lack of ownership at the company level and poor assessment of workforce gaps.

Companies have previously increased stipends for apprentices under the National Apprenticeship Promotion Scheme (NAPS), and a similar adjustment could be considered for PMIS interns, according to reports familiar with the matter.

Second Round of Internships Announced

To meet the FY25 target of 1.25 lakh internships, the MCA has launched the second round of the pilot phase, inviting applications for over 100,000 internships in more than 300 companies. The government is also conducting over 70 information, education, and communication (IEC) events across India to promote participation. 

One such event was held in Kolkata in collaboration with the Confederation of Indian Industry (CII) last week.

Conclusion

Announced in Budget 2024-25, PMIS aims to provide internships to 10 million candidates over five years in the top 500 companies based on corporate social responsibility (CSR) spending. Internships will include a minimum six-month training period to provide industry exposure.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Debt vs Equity vs Hybrid Funds: How Investors’ Age Affects Fund Selection

Investment habits in India have undergone a significant transformation, driven by increasing financial literacy, rapid digitalisation, the rise of fintech platforms, and the proactive role of distributors. A recent AMFI-Crisil report highlights how investment preferences shift across different age groups, reflecting the evolving risk appetite of investors.

The report indicates that younger investors tend to favour equity mutual funds, while older investors show a stronger inclination towards debt and hybrid funds. As individuals age, their investment approach becomes more conservative, prioritising stability over high returns.

Let us explore how different mutual fund categories attract investors based on their age.

Debt Mutual Funds: A Safe Haven for Older Investors

Debt mutual funds are preferred primarily by investors aged above 58, with 48.9% of this group opting for them. These funds offer lower volatility and steady returns, making them an attractive choice for individuals nearing or in retirement.

  • Age 58 and above: 48.9% prefer debt funds
  • Age 45-58: 30.6%
  • Age 25-44: 15.7%
  • Below 25: 1.4%

The popularity of debt funds among older investors reflects their desire for stable income and reduced exposure to market fluctuations.

Equity Mutual Funds: A Favourite Among Young Investors

Equity mutual funds, known for their potential to generate higher long-term returns, are preferred by younger investors who have a longer investment horizon and higher risk tolerance.

  • Age 25-44: 30.2% prefer equity funds
  • Age 45-58: 30.6%
  • Age 58 and above: 31.9%

Despite the shift towards conservative investments with age, a notable proportion of investors above 58 still prefer equity funds, indicating a mix of risk-taking and strategic asset allocation among experienced investors.

Hybrid Mutual Funds: A Balanced Approach

Hybrid mutual funds, which combine elements of equity and debt, appeal to investors looking for a balanced investment approach. These funds allow for a mix of capital appreciation and risk management.

  • Age 58 and above: 51.0% prefer hybrid funds
  • Age 45-58: 29.1%
  • Age 25-44: 16.1%

The increasing preference for hybrid funds among older investors highlights their desire for stability with some exposure to growth-oriented assets.

Index Funds: Gaining Popularity Across Age Groups

Index funds, which follow a passive investment strategy by tracking benchmark indices, have gained traction among investors of all age groups. Their low cost and simplicity make them an attractive option for both experienced and new investors.

  • Age 25-44: 24.3% prefer index funds
  • Age 45-58: 22.3%
  • Age 58 and above: 23.8%

The consistency and diversification offered by index funds explain their rising popularity across different investor segments. 

Conclusion

The AMFI-Crisil report underscores a clear trend—investment preferences shift towards conservative options as investors age. While young investors prioritise equity funds for growth, those approaching retirement gravitate towards debt and hybrid funds for stability.

Understanding these patterns can help investors align their portfolios with their financial goals and risk appetite at different stages of life.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Krystal Integrated Services Bags ₹47.55 Cr Airport Contracts

Krystal Integrated Services Limited (KISL) has been awarded contracts for facility management and security services at three major airports in India, Chennai International Airport, Chandigarh International Airport, and Thiruvananthapuram International Airport. The contracts have a combined value of approximately ₹47.55 crore and vary in duration and scope.

As of 11:24 AM on March 4, Krystal Integrated Services Limited (KISL)  traded at ₹446.50, up by ₹22.15 (5.22%) for the day, though it has declined by 20.57% over the past month and 37.36% over the past year.

Facility Management at Chennai International Airport

KISL has been assigned the upkeep of the T4 Passenger Terminal’s MESS at Chennai International Airport. The contract is valued at ₹20,95,57,352.60 (₹20.95 crore) and will be executed over three years. It was awarded by the Airports Authority of India (AAI), Chennai, under contract reference GEMC-511687759922710 dated February 28, 2025, and was received by KISL on March 3, 2025.​

Chandigarh International Airport Contract

The company has also secured a contract for facility management services at Chandigarh International Airport. This contract, valued at ₹23,60,18,407.32 (₹23.6 crore), also spans three years. It was awarded under contract reference GEMC-511687719402622 on February 23, 2025, and received by KISL on March 3, 2025. The agreement covers sanitation and maintenance services across airport facilities.​

Security Services at Thiruvananthapuram Airport

KISL has been awarded a contract for deploying security personnel for non-core functions at Thiruvananthapuram International Airport. This contract, valued at ₹3 crore, was granted by TRV (Kerala) International Airport Limited (formerly Adani Thiruvananthapuram International Airport Ltd). It runs for 12 months and was awarded under contract reference PROC/TRV/24-25/LOA/PSA/KGC dated January 18, 2025.​

No Related Party Transactions

KISL, as per the filing, has confirmed that none of these contracts involve related party transactions, and there is no promoter or group interest in the awarding entities. All contracts are domestic.

All in all, these contracts add to KISL’s portfolio of large-scale facility management and security service projects, further expanding its operations across airport infrastructure in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Trump’s Tariffs and Their Impact on Consumer Prices: What to Expect

With former US President Donald Trump proposing tariffs on a broad range of imported goods, American consumers may soon face increased prices on everyday products. The extent of these price hikes, however, depends on numerous factors, including market competition, product necessity, and supply chain dependencies. While some sectors might absorb part of the cost, others will see direct and significant price increases.

A report estimates that a 25% tariff on Mexican and Canadian imports and a 10% tariff on imports from other countries could have widespread consequences on consumer goods. This article explores how different sectors may be affected.

Commodity Goods: Minimal Price Increases Due to Competition

Products with ample competition in the market tend to experience lower price hikes, as businesses have the flexibility to source from alternative suppliers or absorb part of the cost to remain competitive.

For example, a 10% tariff on Indian tablecloths would only lead to a 2% rise in retail prices. This is due to the availability of multiple suppliers across different regions. Similarly, other sectors such as clothing, car accessories, and cosmetics are expected to see only marginal price hikes, as consumers are generally not brand-sensitive in these categories.

Luxury and Niche Products: Full Tariff Pass-Through to Consumers

In contrast, niche and luxury products, which have fewer substitutes and dedicated customer bases, will likely experience full tariff pass-through. A 10% tariff on a $21.99 Italian bottle of wine, for instance, would increase its price to $24.08. Since loyal consumers in this segment are less likely to switch brands or seek alternatives, businesses can pass on the full cost to them.

This phenomenon extends to domestic products as well. If imported Italian wines become more expensive, local winemakers in California may also raise prices to capitalise on the higher-priced competition.

Electronics and High-End Consumer Goods: Steep Price Hikes Expected

High-end electronics, especially those with limited manufacturing alternatives, are among the most vulnerable to tariff-induced price hikes. Products such as iPhones, gaming consoles (Nintendo, Sony, and Microsoft), and other electronic devices manufactured primarily in China will see close to full price pass-through.

According to a report, an additional 10% tariff on a $500 gaming console could push the retail price to $548. Given the lack of alternative production hubs and the strong consumer attachment to specific brands, companies can afford to pass on these costs to end-users.

Automobiles, Appliances, and Industrial Goods: Widespread Cost Implications

Some of the most significant tariff impacts are expected in the automobile, home appliance, and industrial goods sectors. Mexico currently accounts for 23% of all US passenger vehicle imports. A proposed 25% tariff on Mexican-built vehicles would not only increase their costs but also drive up prices across the entire industry, as manufacturers take advantage of the opportunity to widen their margins.

This situation mirrors the 2018 tariff implementation on washers, where both washing machines and dryers saw price hikes as retailers linked them together. Similarly, tariffs on raw materials like steel and aluminium will increase the production costs of various household appliances, leading to higher retail prices.

The Broader Economic Impact: Beyond Consumer Goods

The effects of tariffs extend beyond just consumer prices; they disrupt supply chains, increase production costs, and create uncertainty for businesses. US-based companies reliant on imported components may face higher costs, which could lead to reduced hiring, production shifts, or long-term operational changes.

Although tariffs are often framed as protective measures for domestic industries, they generally lead to increased costs for businesses and consumers alike. The longevity of these price increases will ultimately depend on corporate strategies, international trade responses, and broader economic adjustments.

Conclusion: Preparing for a New Trade Reality

As tariff policies continue to evolve, consumers should brace for price changes across a wide range of products. The extent of these increases will depend on trade negotiations, supply chain adaptations, and corporate pricing decisions. While certain goods may only see modest increases due to market competition, others—particularly luxury, electronics, and automobile sectors—will likely experience substantial cost escalations.

With global trade dynamics shifting, businesses and consumers alike will need to navigate the complexities of an increasingly protectionist economic landscape.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Uno Minda Strengthens R&D with New Czech Republic Facility

Uno Minda is strengthening its R&D capabilities by opening a new facility in the Czech Republic. 

Expansion of R&D in the Czech Republic

To strengthen its position in advanced lighting solutions, Uno Minda has set up a new research and development (R&D) center in the Czech Republic. This facility will focus on creating innovative lighting technologies that align with the evolving needs of the global automotive industry.

Global Presence and Technological Leadership

Uno Minda operates 74 manufacturing facilities across multiple countries, including India, Indonesia, Vietnam, Germany, Spain and Mexico. It also runs 37 R&D and engineering centers worldwide, collaborating with leading global manufacturers from Japan, Germany, Korea and China. Innovation and technology remain the core strengths of the company, enabling it to stay ahead in the dynamic automotive sector.

Leadership Transition at Uno Minda

Uno Minda has announced a change in leadership, with Mr. Rajeev Gandotra retiring after serving in multiple roles over 31 years. Mr. Vivek Jindal, previously the CEO of LAS-1, has been appointed as the CEO of the newly consolidated Lighting and Alternate Fuel Systems (LAS) Domain. This restructuring aims to improve efficiency, streamline decision-making and enhance focus on sustainable mobility.

Overview of Uno Minda’s Business

Established in 1958, Uno Minda is a global leader in automotive systems and solutions, supplying various components to major vehicle manufacturers. The company designs and produces over 25 types of automotive parts for passenger and commercial vehicles, as well as electric and hybrid models. Its expertise spans automotive switching systems, lighting, acoustics, seating and alloy wheels with a strong market presence in India.

Share performance 

As of March 04, 2025, at 10:00 AM, the shares of UNO Minda Ltd are trading at ₹804.15 per share, reflecting a loss of 2.95% from the previous day’s closing price. Over the past month, the stock has registered a loss of 19.71%. The stock’s 52-week high stands at ₹1,255.00 per share, while its low is ₹604.55 per share.

Conclusion 

By restructuring leadership and investing in global R&D, Uno Minda reinforces its commitment to technological advancement and sustainable mobility in the automotive industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

SEBI Extends Deadline for AIF Industry Compliance to March 2025

The Securities and Exchange Board of India (SEBI) has extended the deadline for compliance with its updated regulations for Alternative Investment Funds (AIFs) to 31 March 2025. This follows requests from the AIF industry for additional time to implement the changes introduced in 2023.

Revised Regulations for Investor Rights in AIF Schemes

In November 2023, SEBI amended the AIF Regulations, 2012, focusing on investor rights within AIF schemes. Subsequently, in December, the regulator issued detailed guidelines on offering differential rights to certain investors. SEBI mandated that the allocation of investment risks and returns within AIF schemes must be proportional to investors’ contributions. This measure aims to reinforce the fundamental nature of AIFs as pooled investment vehicles, ensuring equal and fair treatment for all investors.

Provisions for Differential Rights in AIFs

As per SEBI’s guidelines, AIFs can provide differential rights to select investors within a scheme, provided that these rights do not compromise the interests of other investors. The objective is to maintain transparency in the distribution of proceeds and decision-making processes while upholding the integrity of the investment structure. AIFs operate as privately pooled investment vehicles, collecting funds from investors and deploying them based on a pre-defined investment policy.

Conclusion

The extension granted by SEBI allows AIFs additional time to comply with the updated regulatory framework while ensuring that investors’ rights remain protected. These measures are designed to maintain equitable distribution of risks and returns among all participants in AIF schemes.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.