Sify- Its not difficult to fathom why SEBI chairman M Damodaran is hell-bent on getting guidelines in place to regulate – at least partially – hedge funds in India.<\/p>\n
| <\/td>\n<\/tr>\n<\/table>\n Total assets in hedge funds investing primarily in India’s markets have risen 400 per cent to $13.97 billion as of July-end 2007 from $2.8 billion at the end of the third quarter of 2005, said HedgeFund.Net, a firm that tracks hedge fund investments.<\/p>\n Since over 90 per cent of such funds invest in Indian equity, that’s almost one-fourth of the net cumulative investments by foreign institutional investors into the asset class during the period.<\/p>\n The interest in India is not without its reasons: “Hedge funds investing in India trail only China as the best performing region or country of investment focus,” says the report.<\/p>\n This is in stark contrast to 2001-2002, when returns in India lagged those of other emerging markets, especially on account of mistrust in India’s markets due to the various stock market scams and the bust-up of US-64, the investment scheme of what was then the Unit Trust of India.<\/p>\n In 2001, the average annual returns of the entire hedge fund space tracked by HedgeFund.Net was 11.42 per cent, while that of India-focused funds was a negative 44.12 per cent.<\/p>\n At that time, funds investing in eastern European markets had the best cumulative returns, according to the report.<\/p>\n But things have definitely changed, with the average performance of India-focused hedge funds being higher than the performance of the entire universe of hedge funds over the past five-and-a-half years.<\/p>\n Even in the three months up to July 2007, when all global markets have suffered on account of the sub-prime defaults in the US, India-focused funds managed a return of 12.33 per cent, higher than the 3.31 per cent for the hedge fund aggregate average.<\/p>\n |