ALTERNATIVE INVESTMENT FUNDS. PRIVATE EQUITY FUNDS BARRIERS FACED WHAT IS IT FOR THE PORTFOLIO COMPANIES? EXIT AND RETURN ON INVESTMENT FUTURE.

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Presentation transcript:

ALTERNATIVE INVESTMENT FUNDS

PRIVATE EQUITY FUNDS BARRIERS FACED WHAT IS IT FOR THE PORTFOLIO COMPANIES? EXIT AND RETURN ON INVESTMENT FUTURE

SOCIAL VENTURE FUNDS HDFC CANCER FUND ACUMEN FUND

W HAT IS A H EDGE F UND Definition: An aggressively managed portfolio of investments that uses advanced Objective: Investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). 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.

C HARACTERISTICS OF HEDGE FUNDS Open only to Qualified Investors or Institutions. Use advanced investment strategies. Privately managed. Loosely regulated High Management fees.

F EES STRUCTRURE Management Fees: Typically 1%-2% of assets under management. Usually charged quarterly in advance Incentive fee: 20-25% of the fund is the norm

INVESTMENTS IN DERIVATIVE FUNDS

Securitization of Debt Funds Creation of Mortgage Pass-through's Collateralized debt obligations Federal-Owned GSEs SECURITIZATION OF ASSETS

COLLATERALIZED DEBT OBLIGATION $20B 2004 $180B 2007 $20B 2008 ISSUANCE Chain Reaction Liquidity Crunch

WHAT ARE COMMODITIES? Primary and raw products Exchange traded On regulated exchanges In standardized contract sizes History Regulated by- Forward Markets Commission (FMC)

FUNCTIONING Over the counter Delivery based Primarily between producers and consumers Exchange traded ……. cont

EXCHANGE TRADED Features Better price discovery Larger number of participants Chiefly derivative based Margin money Motive behind investment Speculation Arbitrage hedging

R EAL E STATE – T YPES OF I NVESTMENTS Public securities (e.g., publicly traded REITs) o Some investors include REITs in their Equity allocation, not real estate Real estate debt o Unsecured or secured o Investors typically bucket investing in RE debt in Fixed Income, not Alternatives Private real estate investments  Alternative investment o Direct investment: owning interests in real estate o Funds: committing money, usually alongside other investors, to a third-party manager which in turn buys real estate

SEBI R EGULATIONS FOR A LTERNATIVE I NVESTMENT F UNDS The need for Regulation Defining the objective Regulations: o VC o PIPE o Debt o Infrastructure o Real Estate