Karvy Wealth said on Wednesday it would soon launch a hedge fund. Hrishikesh Parandekar, chief executive officer & group head (broking, wealth management and asset management), Karvy Wealth, said that thanks to the new norms for Alternative Investment Funds (AIF) issued by the Securities and Exchange Board of India (Sebi) earlier this year, the market would see many hedge funds launched.
The AIF guidelines will regulate all private equity players, venture funds, real estate funds and hedge funds. Like mutual funds, hedge funds pool investors’ money and invest those in financial instruments in an effort to make positive returns. They can invest in any asset class - stocks, bonds, commodities, real estate, private partnerships — or exotic debt products like packaged sub-prime mortgages. They can run highly concentrated portfolios. Till now, hedge funds have been largely unregulated.
Sebi has fixed a higher share of continuing interest for fund managers of hedge funds compared to those managing private equity/venture funds, infrastructure funds or those looking at small and medium enterprises (SMEs).
Parandekar said the fund will constitute both equity and currency. It will follow the quantitative algorithm method of investing, he said. Karvy is still in the early stages of getting approvals for it.