Expert Zone

Straight from the Specialists

Dollar shock for Indian hedge funds

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

2011 has been an annus horribilis for Indian hedge funds. All hedge funds, with one exception, are currently in the red — the Eurekahedge Indian Hedge Fund Index was down 16.9 pct as of end-October and early reports suggest that things went from bad to worse in November.

After witnessing two years of strong returns, Indian hedge funds started their 2011 campaign with two months of negative returns. It should be noted, however, that despite these losses, they managed to beat the market by significant margins.

For the first half of the year Indian hedge funds were able to hold their own in an adverse investment environment marked by high volatility and declining investor risk appetites. The average Indian hedge fund outperformed the market and by July-end 2011, the Eurekahedge Indian Hedge Fund Index was down only 5 pct while the market had declined by more than twice that much — the BSE Sensex was down 11.3 pct July year-to-date.

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