Future of Hedge Funds in Asia

Contributed By: Team Voyage Capital, IIM Indore

Event Date: 22 August 2018

Voyage Capital, the Investment and Equity Research Club of IIM Indore hosted the session on “Future of Hedge Funds in Asia” conducted by Mr. Jainendra Shandilya, CFA, CAIA, in collaboration with Indore Chapter for CFA Society. Mr. Shandilya is an esteemed Faculty Member at the National Institute of Securities Markets(NISM). He has represented SEBI before the Central Information Commission for ensuring compliance under the Right to Information Act, 2005. He holds Master Degree in Economics and is also CFA and CAIA charterholder and is the Chapter Head of CAIA India. The event also witnessed esteemed guests like Mr. Pramod Saraf, CFA and Director of Swan Finance Limited and Mr. Gaurav Somani, CFA and Director of Finoptions Institute of Financial Studies.

In this session Mr. Shandilya busted the prevalent myths of Hedge Funds being highly risky, illiquid and an irregular vehicle for investment. He compared the Hedge Funds in India, Asia and Western World and the results were astonishing. Indian and Asian markets, despite having an abundance of Mutual Fund schemes, are still at a very nascent stage in terms of Hedge Funds. The total corpus of Hedge Funds in the Asia Pacific region is around $157 billion, whereas that of Western Countries is close to $3 trillion.

He explained why hedge funds were able to deliver superior returns over traditional investment instruments such as mutual funds. The most important reason for the same was the use of leverage, capacity to go short and the high amount of due diligence gone into each potential investment. Another important aspect of the discussion was related to the advancement in technologies which have led to algorithmic trading and other software based portfolio management schemes. All these have posed a serious threat to the jobs of traditional fund managers, which brings Hedge Funds in positive light as they are more personalised.

He discussed about the scope of Hedge funds in India and the future job opportunities and roles. He shared his positive outlook towards the Industry by citing the fact that at present around 5000 mutual funds in India function with a corpus of more than $300 billion, whereas only 200 hedge funds currently operate in the country having an approximate corpus of $1 billion. Thus, a high rate of growth can be expected in the next 5-10 years.