Halbis, the active asset management specialist of the HSBC Group, has announced plans to launch the India Alpha Fund, managed by its award-winning team of Indian equity specialists headed
Halbis, the active asset management specialist of the HSBC Group, has announced plans to launch the India Alpha Fund, managed by its award-winning team of Indian equity specialists headed by Sanjiv Duggal, on April 2.
According to Bill Maldonado, head of alternative investments at Halbis, the India Alpha Fund is designed to deliver risk-adjusted returns with little dependency on beta, which is similar to the existing Halbis hedge fund offerings.
He added: ‘Our budgeted volatility is 10 per cent and the net exposure range will be in the range of minus 20 per cent to plus 40 per cent, with an average of plus 30 per cent. The strategy is also designed to complement the team’s existing long-only strategies.
‘There will be two components within the portfolio. The first is best ideas, for long and short positions based on the existing long-only strategy. The second component will be long/short pairs trades, where valuation anomalies are matched up within a sector.’
Adds Duggal: ‘A characteristic of the Indian equity market is that it is very rumour- and consequently momentum-driven, which affects short-term share prices, often without any fundamental rationale. Ultimately, fundamental valuation factors mean that stocks return to their intrinsic value, but these deviations create significant opportunities which we seek to exploit.’
With more than USD7bn under management in Indian equities at the end of last year, the Halbis team is one of the largest investors in the Indian stock market. Its flagship HSBC GIF India Equity fund has a top-quartile ranking since its launch with cumulative returns of 1,183 per cent in US dollar terms from February 29, 1996 to March 9 this year, on a bid to bid basis with gross dividends reinvested, compared with a return of 264 per cent for the S&P/IFCI India Index over the same time period. Duggal is supported by Manish Srivastava and Viresh Mehta as Indian equity specialists.
The Indian Alpha fund will charge a 1.5 per cent annual management fee and a 20 per cent performance fee, subject to a high water mark. Halbis is looking to raise USD500m and will soft close the fund at USD300m. The minimum investment is USD100,000, though most investors are expected to invest USD1m or more. Monthly liquidity will be provided.
Halbis focuses on European equities, value-added fixed income, Asian and emerging market equities, and some alternative strategies. With USD93bn in assets under management at the end of December, it is one of four HSBC investment management businesses, alongside HSBC Investments, Sinopia and HSBC Specialist Investments, which manage aggregate assets of USD 329bn.
