Alpha Alternatives’ Approach to Generating Consistent Alpha Returns

Markets love certainty. Investing rarely provides it.

Investors constantly wrestle with the same questions:

• Should we invest now or wait for a correction?
• Is it too late to enter at these levels?
• Can volatility still deliver returns without destroying capital?

At AltPort, we see these questions as signals—not of confusion, but of a deeper problem: most portfolios are not designed to balance risk, liquidity, and return simultaneously. This is precisely where Alpha Alternatives’ investment philosophy and product design stand out.

Let’s break down how Alpha Alternatives approaches alpha generation, why their structure matters, and how their strategies fit into a modern portfolio framework.

Understanding the Alpha Alternatives DNA

Founded in 2013 and headquartered in Mumbai, Alpha Alternatives Fund Advisors LLP is built around one core idea:

Returns should not depend on market direction alone.

Led by Naresh Kothari, Founder and Managing Partner (ex-Edelweiss), the firm manages approximately USD 2.5 billion across:

• Equities
• Commodities
• Structured credit
• Quantitative and market-neutral strategies

Alpha Alternatives operates with a platform-plus-entrepreneur model, allowing specialist teams to build focused strategies while leveraging centralized risk management and governance. Their innovation credentials include:

• India’s first Category III AIF focused on commodities
• A recently launched USD 500 million infrastructure fund
• SEBI-registered PMS and AIF platforms with differentiated mandates

This foundation is crucial to understanding how consistent alpha is pursued—not promised.

The Real Investing Problem: Risk, Liquidity, and Return

Every investment decision is a trade-off between three variables:

• Risk – probability of not earning expected returns
• Liquidity – ease of converting investment into cash
• Return – income or capital appreciation

In an ideal world, investors want all three. In reality, you usually sacrifice one to gain the other two.

The Classic Trade-Off Matrix

This is where investor confusion often begins. Products offering safety rarely grow wealth meaningfully. Products offering growth tend to bring volatility.

Where PMS, MFs, and AIFs Fit In

Modern investing has evolved. Investors no longer need to choose a single asset class. Instead, structures like Mutual Funds (MFs), PMS, and AIFs allow optimized combinations of risk, liquidity, and return.

Alpha Alternatives positions its offerings squarely in this space—strategies designed to capture alpha while actively managing downside risk, rather than chasing market beta.

The 5-50-500 Model: Alpha Is Earned, Not Launched

One of Alpha Alternatives’ most defining strengths is its 5-50-500 investment validation framework. This model ensures strategies are proven before being scaled.

Mastering Long-Term Success Through the 5-50-500 Model

This approach avoids a common industry pitfall—launching products based on back-tests or short-term success. At AltPort, we view this as one of the most credible frameworks for sustained alpha creation.

Alpha Alternatives PMS Offerings: Strategy in Action

1. Special Situations Discretionary PMS

This strategy focuses on event-driven and mispricing opportunities, where price dislocations—not market direction—drive returns.

2. Systematic Equity PMS

Here, rule-based frameworks and disciplined execution reduce emotional bias—one of the most underestimated risks in investing.

Why Consistent Alpha Is So Hard

Even experienced investors struggle because:

• Markets evolve, but strategies often don’t
• Over-concentration creates hidden risks
• Bias toward past winners leads to underperformance
• Lack of rebalancing quietly erodes returns

Sticking to a single style or refusing to adapt can turn yesterday’s winning strategy into today’s liability.

Alpha Alternatives addresses this by designing ground-up strategies, supported by continuous review, risk controls, and adaptive positioning.

Risk Management: The Silent Alpha Driver

Alpha is not just about making money—it’s about not losing it when conditions change.

Alpha Alternatives differentiates itself through:

• Rigorous portfolio-level risk controls
• Strategy diversification across asset classes
• Active monitoring and rebalancing
• Avoidance of style or sectoral rigidity

This discipline matters because investors lose money in two ways:

1. By not investing and missing growth and inflation protection
2. By investing in the wrong product for their risk profile

Alpha Alternativess focuses on minimizing both.

How AltPort Views Alpha Alternatives

At AltPort, we evaluate strategies through a single lens:

Can this approach survive full market cycles without relying on luck?

Alpha Alternatives stands out because:

• Alpha generation is process-driven, not narrative-driven
• Strategies are tested with real capital before scaling
• Risk, liquidity, and return are consciously balanced—not ignored

This is not about chasing returns. It’s about designing portfolios that function when markets behave badly.

Final Takeaway: Alpha Is a Discipline, Not a Promise

Consistent alpha does not come from predicting markets. It comes from:

• Structured experimentation
• Adaptive strategies
• Ruthless risk management
• Patience to scale only what works

Alpha Alternatives embodies this philosophy. And at AltPort Funds, we believe such disciplined approaches are exactly what modern investors need in an increasingly complex financial world.

In investing, certainty is an illusion but process is not.