New Delhi, Jan. 29 -- Market volatility remains one of the most challenging aspects of investing. For sophisticated investors and institutions, it can erode capital, disrupt financial planning, and lead to inconsistent returns. However, with the right strategies, Alternative Investment Funds (AIFs) have proven to harness volatility, delivering superior risk-adjusted returns within predefined risk parameters.

Yet, before exploring how AIFs mitigate these risks, it's important to understand the root causes of market volatility and the specific challenges it presents to investors.

Volatility challenges

Volatility in financial markets stems from various factors, such as economic uncertainty, geopolitical events, and shifts in monetary poli...