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Sebi to permit hedge funds shortly

After its success in derivatives, Securities and Exchange Board of India on Friday hinted at allowing hedge funds in the country to provide a low risk investment portfolio to investors.

Talking to media on the sidelines of its Electronic Data Filing and Retrieval System's, Sebi chairman G N Bajpai said hedge funds, which are popular in the US would be allowed in Indian market.

Sebi is currently contemplating on this and it might take 18 to 24 months for these funds to be operational, Bajpai said.

Hedge fund can take long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk, an expert said.

The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions.

There are approximately 14 distinct investment strategies used by hedge funds, each offering different degrees of risk and return, market players said.

The Sebi chairman also confirmed that the proposal for T+1 is also in consideration but did not commit a time frame.

Bajpai said Sebi is working on the pending cases of open offer by foreign promoters of Indian companies to Indian share holders and these proposals would be cleared in a week's time.

UNI

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