You are here: Home » Budget » News » Financial Sector
Business Standard

Foreign funds approved for AIFs

Alternative Investment funds can now attract funds from foreign investors, which is likely to help hedge funds

Sachin P Mampatta  |  Mumbai 

Finance Minister Arun Jaitley has said that alternative investment funds can now attract capital from foreign investors, a move which is likely to be cheered by local hedge funds in particular.

India-based hedge funds had been making representations to the authorities to allow foreign funds for some time. They had cited their outperformance compared to India-dedicated hedge funds which are based out of the country as likely to attract interest from foreign players. However, they had been unable to raise any capital, lacking permission to do so.

The regulatory authorities, for their part, are said to have been uncomfortable with allowing large-scale foreign money flow into hedge funds, though this could not be independently confirmed. An email sent on the matter did not immediately receive a reply.

Read our full coverage on Union Budget

Statistics from data provider Eurekahedge shows that the past year (2014) had seen allocations to hedge funds with a mandate to invest in India reach a multi-year peak of $3.45 billion. Around $3.06 billion came from funds located outside the country. In fact, local funds only accounted for $392 million.

India-dedicated hedge funds return was 50.18%, outperforming those based from other countries, which had returns of 44.19%. A similar trend is seen in four out of five of the previous years, according to Eurekahedge data.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sat, February 28 2015. 12:16 IST