India-focused hedge funds generate 46% returns in Jan-Oct to top peer group: HFR

Hedge fund investing in India have been the best-performing funds across the globe in 2014 through October, on the back of expectations that the government led by Prime Minister Narendra Modi will encourage investment to revive South Asian nation's economy, according to a Chicago-based hedge-fund tracker HFR Inc.

The index of hedge funds targeting India offered 46 per cent returns in the current year through October, the Hedge fund tracker said. There are over 60 hedge funds focused on India with assets of almost $3 billion.

Most of these funds have gained from the investment they put in small-to-medium Indian companies stocks of which outperformed the benchmark S&P BSE Sensex, which rose 32 per cent in the year through October, HFR research shows.

Modi-led government has bolstered the investors' confidence in the economy with the promises to encourage investment, restore economic growth, rein in inflation and budget deficit as well as reviving stalled projects.

Total capital invested in Asian hedge funds rose to a record high—by 1 per cent or about $1 billion—in the third quarter even as capital growth slowed due to macroeconomic uncertainty in the region, it added.

“Asian hedge fund performance was led by the HFRI EM (Emerging Markets): India Index, which climbed +46.0 per cent year-to-date (YTD) through October, topping the gain of the Sensex by 1400 basis points. The gain represents the strongest calendar performance through October for the Index since inception, narrowly topping the +45.6 per cent return through October 2009; the HFRI EM: India Index gained +56.2 per cent for FY 2009,” HFR said in the press release.

Moreover, the India-focused funds also helped in bolstering returns for the funds focused on the Asia-Pacific region, excluding Japan, which gained 7.5 per cent in the 10 months ended on October 30, HFR said. On the other hand, China-focused fund gained just 2.85 per cent in the current year through October.

Also, the percentage of Asian hedge funds based in China, Australia and India rose in the first three quarters of this year compared with the same period last year, HFR said.

Earlier in August, another Singapore-based data provider Eurekahedge Pte had said that India-focused hedge funds emerged as the world's best performers this year through July with returns of 26 per cent compared with an average 3.5 per cent gain for those investing in Asia, 1.9 per cent for Greater China, 1.2 per cent for Japan, 3.8 per cent for North America and 1.1 per cent for Europe.

(Edited by Joby Puthuparampil Johnson)

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