Hedge Funds To Replace Pension Funds

Foreign portfolio investment in the Indian equity market in calendar 2003 is expected to see a shift from long term to the short and medium terms with investors looking for quick returns in relatively better return providing destinations. New foreign institutional players are expected in 2003, most of them being hedge funds.

Analysts expect that hedge funds may come in a big way, replacing some of the pension funds. A hedge fund is a private investment portfolio which is allowed to use aggressive strategies that are unavailable to mutual funds and are exempt from many of the regulations governing other mutual funds, which allows them to accomplish aggressive investing goals.

With the tighter US hedge fund norms, low confidence in the dollar, and fewer short term trading opportunities in the US, a portion of the funds is expected to witness a diversion to emerging markets like India.

The US requirement of registering funds that are based offshore with the Treasury Department