Asset management giant IDFC launches equity hedge tactical fund 'IDFC India'
The IDFC India fund, an AIF Category III offering. has the potential to generate returns across bull and bear market cycles alike.
Asset Management Company (AMC) IDFC on Februry 21 announced the launch of IDFC India Equity Hedge - Tactical Fund, an AIF Category III offering. The fund will follow a Tactical Long or Short Equity strategy and target annualized returns comparable to those from equity funds with the potential to generate those returns across bull and bear market cycles alike. The fund will have significantly higher net exposures, typically ranging between -40% to +120%, to have higher participation in equity market movements on both sides.
Commenting on why IDFC AMC decided to launch the product, Vishal Kapoor, CEO, IDFC AMC, said that, “With the current market volatility, investors are looking for a fund that can provide absolute returns irrespective of the market cycle or how the interest rates are moving. Also, as the fund’s return and risk drivers are very different from traditional products it has the potential to offer an uncorrelated alternative. We estimate that IDFC India Equity Hedge - Tactical Fund has the potential to raise Rs. 1000 crore, in the current market.”
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The fund will be managed by IDFC AMC’s Vijay Krishna Kumar, Director- Liquid Alternatives, an early pioneer in Indian Long or Short investing with a 12-year track record and a total investment experience of 19 years. The investment team will include a Forensic Research Analyst, specialising in deep-dive research into company accounts, valuation modeling and identifying key drivers for long and short alpha and an Algorithmic Quantitative Trader, looking into securities dealing, position monitoring and risk management.
Highlighting the key difference between the two AIF Category III funds he manages, Vijay Krishna Kumar, Director- Liquid Alternatives, IDFC AMC said that, “Our first product, IDFC IEH Conservative Fund offered an alternative to various fixed income strategies while the IDFC IEH Tactical Fund will offer an alternative to Equity-oriented strategies. What this allows us to do is to provide an alternative to both fixed income as well as equity-oriented strategies, under one fund house. With the two funds under our belt, we now offer ‘true to label’ alternatives under our AIF Category III platform to both traditional equity and fixed income funds.”
IDFC AMC’s first AIF Category III offering, IDFC India Equity Hedge Conservative Fund, launched in January 2018 follows a Low Net/Market Neutral risk framework in keeping with its conservative character. The new fund, IDFC India Equity Hedge Tactical Fund, will have similar underlying strategies but higher net exposures to better capture equity market movements both on the long and the short side. Being an AIF Category 3 offering, the fund will have a minimum Rs 1 crore investment requirement suitable for Ultra High Net Worth Individuals, Family offices, Corporations, and Institutions.
The objective of these Alternative funds is to add diversification and low correlation to existing traditional investments. They are not meant to replace traditional investments, but to add value to the overall asset allocation mix