MF Alpha Erosion Fuels HNI Shift to PMS & Cat-III AIFs; Domestic Capital Rises

• Mutual fund alpha erosion and declining debt MF yields are driving wealthy investors to alternative asset classes like AIFs and PMS.
• Domestic High Net Worth Individuals (HNIs) and family offices are increasingly dominating inflows into AIFs, shifting from traditional diversified MF structures.
• Equity-linked AIF strategies have consistently outperformed the BSE Sensex PME+ benchmarks across multiple evaluation cycles.
• Regulatory reforms (e.g., dematerialization of AIF units, standardized valuation) are making AIFs more transparent and accessible, accelerating the capital shift.
• Domestic capital now accounts for the majority of AIF commitments, indicating a structural shift where Indian wealth funds the alternatives engine.

Why It Matters: Wealthy investors are abandoning MFs for AIFs/PMS, transforming India's finance.