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MF News ‘MF industry has to develop new strategies to generate alpha’

‘MF industry has to develop new strategies to generate alpha’

A few strategies that fund managers can deploy include long only, long and short calls and leveraging, says Nilesh Shah, MD, Kotak MF.
Padmaja Choudhury Jan 11, 2018

Commenting on the benchmarking of Indian mutual funds against total return index, Nilesh Shah, Managing Director, Kotak Mahindra Mutual Fund said that the move is in line with the developed markets.

He; however, said that fund managers in developed markets can deploy various strategies such as long only, long and short calls and leveraging to generate alpha. In India, the market regulator should look at allowing fund houses use these strategies. “We have requested SEBI to allow fund houses to deploy strategies like long only, long and short and leveraging just like hedge fund managers to generate alpha.”

Currently, mutual funds cannot use long only, long and short and leveraging strategies to manage funds.  While long only indicates buying and holding equity stocks (both listed and unlisted) with no other alternative strategy involved, long and short strategy refers to buying and selling stocks through future markets. Levering indicates deploying investment with borrowed money. Currently, investors can take exposure to these strategies through category III AIF that includes long only funds and hedge funds.

Shah cautioned that Indian fund managers should first understand these strategies.

Another way to add value is to launch offshore funds. “Offshore funds invest in some of the fastest-growing markets in the world. These funds are meant for foreign investors. Currently, fund houses garner foreign assets by advising foreign investors through PMS or by launching an offshore funds based out of Mauritius, Singapore etc.,” said Shah.

 

 

 

  

 

 

 

3 Comments
Shailesh Sampat · 1 week ago
I have developed my own mechanism which is capable to generate almost 5%(XIRR) more Return against regular SIP STP and also gain higher margin of safety during longer span.

In 17year span my plans backtesting I have generated 10263000 by investing just ?250000/-

I am also beating Direct Plans by more than 1%
Avishek Guha · 1 week ago
What is the mechanism?....can u share ?
Reply
Shailesh Sampat · 1 week ago
I have developed my own mechanism which is capable to generate almost 5%(XIRR) more Return against regular SIP STP and also gain higher margin of safety during longer span.

In 17year (Jun 2000 to Nov 2017) span my plan's backtesting I have generated 10263000 by investing just ?250000/- In HDFC CMF TAP & EQUITY FUND COMBINATION

I am also beating Direct Plans by more than 1% in HDFC CMF TAP & EQUITY FUND as well as RELIANCE LIQUID CASH & EQUITY OPP. FUND COMBINATION
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