Category Three Funds and India’s Absolute-Return Ambition

Overview:
Category Three Alternative Investment Funds use hedging and leverage to generate steady absolute returns, similar to hedge funds globally.

Key Points:

• Global hedge fund assets ≈ USD 5.1 trillion (2025); India’s Category Three assets ≈ USD 14 billion, growing 30 percent year-on-year.
• Strategies: long-short equity, arbitrage, market-neutral positions.
• SEBI rules restrict leverage to twice investor capital – safeguard against systemic risk.
• Average net return FY 2025 = 11.2 percent vs Sensex 8.6 percent.
• Institutional investors allocate up to 10 percent of portfolio to these strategies for volatility control.

Truvest Capital Insight:
India is learning from global hedge fund discipline – measured risk is sustainable risk.

Disclaimer: Educational content only. Not investment advice.