Hedge funds can best be regarded as portfolios that are managed with the focused objective of delivering positive returns notwithstanding market conditions.
Investment Strategies
Hedge Fund managers generally have a free rein and engage in arbitrage, short selling, hedging and leveraging. Hedge funds are so named because they use diverse, sophisticated and complex strategies to protect their portfolio from risks, maximize rewards and contain setbacks
Regulation
Hedge funds fall within the ambit of the SEBI (Alternative Investment Funds) Regulations, 2012 and are categorized as Category III AIF (Alternative Investment Funds).
Salient Features
- Except for High Net-worth Individuals (HNI), these funds are not a practically feasible option for retail investors because minimum investment has been prescribed as Rs.1.00 crore;
- The fund may not admit more than 1000 investors;
- The sponsor or anchor investor must retain a minimum investment equivalent to the lower of 5 per cent of the corpus or Rs.10.00 crore;
- Filing of an information memorandum with SEBI is mandatory prior to launching of such funds;
- Such funds may be either close-ended or open-ended and lots of not less than Rs.1.00 crore may be traded on stock exchanges;
- The fund shall be regarded as a Qualified institutional Buyer (QIB) but is not permitted to invest more than 10% of the corpus in a single investee company;
