15 Best Hedge Funds in India to Invest in April 2023 (2024)

Hedge funds are privately pooled investments that ‘hedges’ or reduces market risks and uses various complex strategies to deliver high returns. They typically cater to HNIs (high-net-worth individuals) as the minimum investment starts from Rs.1 crore. Hedge funds work independently of the market index and are actively managed by many seasoned fund managers. Interested to invest? Here’s a list of the 15 best hedge funds in India you can consider investing in 2023. Read on!

15 Top Performing Hedge Funds in India to Invest in 2023

The following are the best hedge funds 2023 in terms of AUM (Assets Under Management).

Disclaimer: An investment in a Hedge Fund is not suitable or desirable for all investors. Only Qualified Eligible Investors may invest in Hedge Funds.

Best Hedge Funds 2023 in India – Detailed Overview

1. Blackrock Advisors

BlackRock Advisors, LLC is the world’s largest asset manager with an AUM of US $10 trillion as of January 2022. It invests in publicly traded companies. This fund firm also maintains a dedicated India Fund that has invested in many start-ups headquartered in Bengaluru. The company offers portfolio management, financial planning, and investment advisory services.

2. Citadel LLC

Citadel LLC is an American multinational hedge fund and financial services company with an AUM of US $50 billion as of May 2022. Its investment strategy is to invest in equities, fixed income, commodities, quantitative strategies and credit.The Company offers portfolio construction, risk management, financial planning, and investment advisory services. Citadel Advisors serves customers worldwide.

3. Bridgewater Associates

Bridgewater Associates, an American investment management firm, serves institutional clients including endowments, pension funds, foundations, central banks and foreign governments. As of March 2022, the AUM of the firm is $235.5 billion. The firm utilises a global macro investing style based on economic trends such as inflation, currency exchange rates, and U.S. gross domestic product.

4. AQR Capital Management

AQR Capital Management (Applied Quantitative Research) is a global investment management firm based in Greenwich, Connecticut, United States. As of March 2022 the firm’s AUM is $145.5 billion. The firm is a strong proponent of diversification within portfolios, as well as adding strategies with low correlation to traditional asset classes as a complement to existing portfolios.

5. Man Group PLC

Man Group PLC is an active investment management business listed on the London Stock Exchange. As of March 2022, the AUM of this firm is $151.4 billion. It is the world’s largest publicly traded hedge fund firm. It offers over 75 investment strategies across a variety of investment styles, approaches and asset classes and trades in over 800 markets worldwide.

6. Renaissance Technologies

Renaissance Technologies LLC, also known as RenTech is an American hedge fund that specialises in systematic trading using quantitative models derived from mathematical and statistical analysis. As of March 2022, the AUM stands at $121.8 billion. This fund firm uses quantitative trading, where staff tap data in its petabyte-scale data warehouse to assess statistical probabilities for the direction of securities prices in any given market.

7. DE Shaw & Co LP

D. E. Shaw & Co., L.P. operates as an investment and technology development firm. The Company provides investments in equities, futures, and options, as well as offers portfolio management and financial advisory services. As of March 2022, the AUM of D. E. Shaw & Co. is $128 billion. The company manages a variety of investment funds using quantitative methods, proprietary computational technology, and qualitative analysis to make private equity investments in real estate, technology, financial services, wind power and distressed company financing.

8. Tiger Global Management

Tiger Global Management, LLC (often referred to as Tiger Global and formerly known as Tiger Technology) is an American investment firm. It mainly focuses on the Internet, software, consumer, and financial technology industries. It invests in publicly traded companies by using equity strategies and as of June 2022, the AUM is $124.7 billion.

9. Two Sigma Investments LP

Two Sigma Investments is a New York City-based hedge fund that uses a variety of technological methods, including artificial intelligence, machine learning and distributed computing, for its trading strategies. A few specialised divisions focus on private investments, venture capital investments. As of March 2022, the AUM stands at $81.2 billion.

10. Millennium Management

Millennium Management is an investment management firm with a multi strategy hedge fund offering and is made of 280 investment teams. The firm operates in America, Europe and Asia. It is one of the world’s largest alternative asset management firms with an AUM of over $50 billion.

11. Elliott Asset Management

Also known as one of the world’s largest activist funds, Elliott Management Corporation is an American investment management firm. It is a multi-strategy hedge fund and its AUM stands at $83.5 billion as of June 2022. The Company provides portfolio management and consulting services to pension plans, endowments, foundations, sovereign wealth funds, individuals and families.

12. Davidson Kempner Asset Management

Davidson Kempner Capital Management LP is a global institutional alternative investment management firm with over $44.1 billion AUM. It employs a bottom-up, fundamental method of investing and a multi-strategy approach. Globally, the firm invests in a variety of credit and equity strategies as well as real assets.

13. Lone Pine Capital Management

Lone Pine Capital is an American-based hedge fund and investment advisor with an AUM of $35.5 billion as of March 2022. It invests in public equity markets across the world and provides its services to pooled investment vehicles, pensions and profit-sharing plans.

14. Baupost Group Asset Management

Baupost Group Asset Management is one of the largest hedge funds in the world and has an AUM of $31.6 billion as of March 2022. Since its inception, the firm has generated an average annual return of 20%. According to Bloomberg L.P. Baupost has ranked 4th in net gains since its inception.

15. Point 72 Asset Management

Point72 Asset Management, L.P., is an American hedge fund with an AUM of $138.5 billion as of May 2022. The firm is into long/short equity investing, systematic investing, global macro investing and institutional private investing.

How Do Hedge Funds Work?

Hedge funds invest in debt, equities and derivatives (futures and options). Hedge funds are managed by multiple fund managers. They have almost complete discretion in choosing portfolio composition and investment strategies. This allows them to quickly respond to market conditions and adjust portfolio and risk exposure.

For example, with futures, there is an obligation to buy or sell an underlying stock at a predetermined price, time and date. However, there are no obligations with options trading.

In India, hedge funds were introduced in 2012 by the Securities and Exchange Board of India (SEBI) under SEBI Regulations, 2012. They fall under category III of Alternative Investment Funds (AIF). To qualify as a hedge fund, a fund needs to have a minimum corpus of Rs.20 crore and a minimum investment of Rs.1 crore per investor.

How to Invest in Best Hedge Funds

Benefits of Investing in Hedge Funds

• Hedge funds are designed to align the interests of investors and fund managers. The high watermark clause incentivises the fund manager to deliver high returns.
• These funds cover all sorts of asset classes only limited by their mandate. This allows fund managers to employ complex diversification strategies.
• Investors get the benefit of a fully customised portfolio and personalised services.
• Returns from these investments are usually independent of the market index. Hence, they are less prone to market fluctuations. This reduces overall portfolio volatility.
• These funds take advantage of the mispricing of securities by utilising short-term trading methods.

Things to Consider before Investing in Top Hedge Funds

1. Risks and Returns

As hedge funds offer the highest maximum potential returns, they also come with very high risks. Due to their high aggressiveness, losses can be very high similar to profits promised.

2. Investment Goals

Every hedge fund comes with its own financial goals and philosophy, which influences its strategies. Investors will need to check if the fund’s goals align with their own before investing.

3. Expenses

Besides an expense ratio, these funds also charge a management fee. In India, the expense ratio can be up to 2%, while management fees can be around 1-2%. There is also a considerable performance fee of around 10-15% applicable.

4. Taxation

As it is a Category III AIF, taxes are applicable at the investment fund level. Unitholders are not liable to pay taxes on these funds.

Taxation on Income from Hedge Funds

Hedge funds are category III AIF. For annual earnings from these funds over Rs.5 crore, the applicable tax rate is 42.74%. Also, unlike mutual funds, hedge funds are not given a pass-through status on tax. Meaning, the income from these funds are taxable at the investment fund level and the tax obligation does not fall on the unit holders.

Final Word

Hedge funds are investment options targeted towards high net-worth individuals and large institutions. They apply various complex investment techniques, including hedging and arbitrage, to achieve their financial goals. The best hedge funds seek to minimise market risks while aggressively pursuing high returns.Unlike hedge funds, you do not need Rs.1 crore to start investing. You can start with as low as just Rs.10! Head over to Navi Mutual Fund and secure your financial future now!

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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.