Stock Market News & Stocks to Watch from StraightStocks » India Hedge Funds http://www.straightstocks.com Leading Stock Market News, Opinions and Commentary Tue, 24 Nov 2009 18:56:56 +0000 http://wordpress.org/?v=2.8.5 en hourly 1 Hedge Funds in India http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india-2/ http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india-2/#comments Sun, 31 Aug 2008 17:15:21 +0000 Richard C. Wilson tag:blogger.com,1999:blog-125009547106294711.post-5929465841690856592 Hedge Funds in India

The Benefits of Offering Hedge Funds in India

Hedge Funds in IndiaHere's a short article on how the Committee of Financial Sector Reforms in India might introduce hedge funds and why this would be a positive move for the Indian markets and fund industry as a whole.
______________________

The Draft Report of the Committee on Financial Sector Reforms headed by Professor Raghuram Rajan was issued for comment in April 2008. Among the proposals that the high-level committee made was the introduction of domestic hedge funds. The committee feels that, “The presence of hedge funds would induce greater competitive pressure for other regulated fund management channels such as mutual funds.”

This week’s article discusses the benefits of introducing hedge funds in the Indian market. It shows how hedge funds could improve asset price efficiency. Besides, such funds, by virtue of their diverse investment styles, could provide investors an opportunity to enhance their risk-adjusted portfolio returns.

Of different genre

Suppose a long-only (mutual fund) manager and a hedge fund manager both have a negative view on SBI, a positive view on HDFC Bank and a neutral view on ITC.

Long-only active managers will buy ITC in the same weight as their benchmark index, may overweight HDFC Bank and may not take any exposure in SBI. There is a reason for such a strategy. Active managers strive to beat their benchmark index. But they do not take too many active bets, lest their bets go wrong. Often, active funds tail the benchmark index with few active bets. Importantly, such managers cannot short-sell to take advantage of their negative view on a stock.

Hedge fund managers’ do not suffer from such constraint. In the above example, the hedge fund manager may overweight HDFC Bank, short-sell SBI and not take any exposure in ITC.

Better still, to neutralise any market risk, the hedge fund manager may buy HDFC Bank and short-sell SBI in such a way that the market risk in HDFC Bank is offset by short-selling SBI. Often, neutralising market risk on a portfolio would mean short-selling Nifty futures.

Exploiting price inefficiency

Hedge funds identify mispriced assets and exploit any price inefficiency. One way to do this is to employ statistical arbitrage.

Suppose a hedge fund manager finds that combination of one share of HDFC Bank and two short shares of SBI (1HDFC – 2SBI) has a stable statistical distribution. If the “spread” wanders far away from its mean, a hedge fund manager would set-up this strategy with a view that the “spread” will tighten. Such relative-value strategies can help arbitrate away asset price inefficiencies in a “normal” market. Read more...

Free Daily Hedge Fund Newsletter

Related to Hedge Funds in India:

Permanent Link: Hedge Funds in India - Proposal

Tags: Hedge Funds in India, Mumbai, Bombay, Delhi, Calcutta, Bangalore, Chennai, Madras, Ahmadabad, Hyderabad, Pune, Kanpur, Surat, Jaipur, Lucknow, Nagpur, Indore, Bhopal, Ludhiana, Patna, Vadodara, Agra, Varanasi, Nashik, Mirat, Haora, Pimpri, Allahabad, Amritsar, Visakhapatnam, Rajkot, Jabalpur, Koyampattur, Madurai, Srinagar, Sholapur, Ranchi, Jodhpur, Gwalior, Vijayawada, Chandigarh, Aligarh, Bhubaneswar, Jamshedpur, Bhilai, Jammu, Dhanbad
]]> http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india-2/feed/ 1 Hedge Funds in India http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india/ http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india/#comments Wed, 13 Aug 2008 19:32:29 +0000 Richard C. Wilson tag:blogger.com,1999:blog-125009547106294711.post-1927844017385815301 Hedge Funds in India

Hedge Funds Based in India

More hedge funds which seem to mostly manage over $300M each are establishing a presence in India. Here is an excerpt from a recent article from VC Circle:

A bear market rally on the Indian bourses is attracting a renewed interest from the hedge fund managers. It is now, Stephen Mandel, one of the highest paid hedge fund managers in the world, eyeing the Indian stock markets. Lone Pine Capital LLC, run by Stephen Mandel, and Traxis Partners LLC, are among 56 overseas funds who have registered with market regulator SEBI in July alone to invest in Indian markets, reports Bloomberg.

Interestiongly, this period saw the maximum number of hedge funds registering in India. Samir Arora’s Helios Capital Management Pte is another leading hedge fund that have registered with SEBI. Stonewater Capital LLC was another one. Caxton Associates LLC, an $11 billion fund started by Bruce Kovner, and Daniel Loeb’s Third Point LLC are also among 293 funds approved in India this year. Dubai-based Baer Capital Partners had recently launched Beacon India Alpha Equity Fund, a long/short equity fund.

Why sudden surge of interest? The funds were asked to register in India to invest in indian shares, or given 18 months to sell their holdings. SEBI board will meet today to evaluate the impact of those rules, Bloomberg reported quoting the finance ministry."

Read the full article by clicking here
- Richard

Subscribe To this Blog via Email | Or RSS

Articles related to Hedge Funds in India:

1. Geographical Hedge Fund Guides
2. India Hedge Funds
3. New York Hedge Fund Guide
4. Canada Hedge Fund Guide
5. Hedge Fund Managers
6. London Hedge Fund Guide
7. Chicago Hedge Fund Guide
8. Japan Hedge Fund
9. European Hedge Fund Guide
10. Dubai Hedge Fund Guide

Permanent Link: Hedge Funds in India

Tags: India Hedge Funds, India Hedge Fund, Hedge Funds in India, Hedge Funds based in India, Fund of Hedge Funds in India, Indian Hedge Funds, Indian Hedge Fund of Funds
]]> http://www.straightstocks.com/investing-in-hedge-funds/hedge-funds-in-india/feed/ 1