India Hedge Funds Industry

India Hedge Funds Industry

India Hedge Funds Lead Industry, Region Still Turbulent

Hedge funds in India have struggled to find their footing in the first seven months of 2010. India has been the best performing region in the industry, returning 4.6% so far this year, according to recent data. While this is good news, hedge funds in the region were negative for three of the seven months of the year showing some turbulence even in the leading hedge fund area.
Eurekahedge India index has outperformed the Eurekahedge emerging market index that gained a marginal 1.8 per cent in the first seven months of this year and the Eurekahedge Asia index that is down 0.4 per cent. But despite the relatively stronger performance of India hedge funds this year, they are nowhere close to the stellar 53.6 per cent returns recorded in 2009.

Hedge funds investing in India are mainly long-short equity funds investing in small and mid cap companies. These funds tend to outperform other regions when equity prices are moving higher and they also underperform on the way down. It may be recalled that Eurekahedge India index lost 50 per cent in 2008, one of the worst performing indices in the previous crash.

Eurekahedge, hedge fund index that tracks returns of over 22,400 funds across regions, has recorded 1.3 per cent gain in July after being down 0.66 per cent in June. YTD return from this index is flat at 1.1 per cent as most asset classes including equities, commodities and foreign currencies turned choppy from the outset of this calendar. This performance also does not compare well with the gain of 19 per cent in 2009. Source

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