Interview- Mr. Vaibhav Sanghvi, MD & Fund Manager, Ambit Investment Advisors & Governing Council Member- IAAIF

‘Hedge funds can transform India from a developing market to a developed market’
Vaibhav Sanghvi, MD & Fund Manager, Ambit Investment Advisors who manages over Rs. 1,000 crore in Ambit Alpha Fund, talks to Cafemutual about the challenges facing the hedge fund industry in India and what is it required to make hedge funds more popular in India.

How is the appetite for hedge funds among Indian HNIs?
Hedge funds are a preferred choice as an investment vehicle globally for offering risk-adjusted returns and we are gaining broader acceptance in India among HNIs. Risk-averse investors, especially those who wish to ride on the upside of the market and at the same time wish to limit downside are keen to invest in hedge funds, known as Category III Alternate Investment Funds (AIFs).

How do you go about constructing your portfolio?
How do you protect the downside? We adopt a combination of top-down and bottom-up approach. We closely track global markets and economies to determine the relative strength and positioning of India as an investment destination. We then assess the growth of our economy and determine the sectors and the stocks to invest in. Additionally, we have sectoral and stock specific caps which reduces the concentration risk. To generate returns, we have a minimum hedge in the portfolio for downside protection and reducing the volatility.

Give us an overview of how big is the hedge fund market globally.
Hedge fund industry forms a majority of the total allocation to alternates. In our estimate, alternates command an allocation close to 12% of total financial assets. We believe that the total size of hedge funds is close to about USD 3 trillion globally.

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