The Indian alternative investment space has grown exponentially — and with it, the risk of poorly structured products, misleading track records, and misaligned incentives. Before committing even ₹50 lakhs to a PMS or AIF, here are five warning signs every investor must evaluate carefully.
Inconsistent performance attribution. If a fund manager cannot clearly explain why their portfolio outperformed or underperformed in a given quarter, it signals a lack of investment discipline. Returns must be explainable — not coincidental.
AUM concentration risk. A manager running ₹500 crore across 20 stocks is very different from one managing ₹5,000 crore in the same strategy. Excessive AUM dilutes alpha. Ask how the fund’s performance has evolved as it scaled.
Fee structures that favour the manager, not you. Watch for high fixed management fees combined with low performance hurdle rates. Alignment happens when the manager earns significantly only when you do.
Style drift. A fund that described itself as a large-cap value strategy but now holds mid-cap growth bets has drifted. Check if portfolio composition matches the stated mandate — every quarter.
No independent custodian. Your assets must always sit with a SEBI-registered custodian, not within the fund house itself. This is non-negotiable for investor protection.
At EZY Invest, every fund on our shelf passes a rigorous three-stage due diligence process that screens for exactly these risk factors — so you invest with confidence, not guesswork.
Explore our curated investment shelf at EZY Invest.
