Renaissance Technologies, the world’s largest hedge fund firm handling assets worth $35.4 billion (Rs 1,41,600 crore), has received approval from the Securities and Exchange Board of India (Sebi) to operate in the Indian stock markets as a foreign institutional investor. Renaissance is the latest — and the biggest — among several hedge fund players that entered India following a liberal approach taken by the Indian regulator on hedge fund participation in the booming Indian stock market. Others that recently entered include Vikram Pandit-founded Old Lane, DE Shaw (the world’s fifth-largest hedge fund with $29 billion or Rs 1,16,000 crore worth assets) and Och-Ziff Capital Management (the seventh largest with $28.6 billion or Rs 1,14,400 crore in assets), according to the Sebi website. Renaissance, founded by 69-year-old Jim Simons, is based out of Manhattan, the US, and is perhaps the most interesting hedge fund. It has more than 260 employees — many of them are PhDs and not conventional analysts from management schools.   more »

India’s stock market regulator Securities and Exchange Board of India (Sebi) will soon come out with guidelines regulating hedge funds that wish to operate here. “We are looking to provide a broad-based, registered and regulated platform to these entities, depending on their individual track records,” said a senior official at Sebi who did not wish to be identified. Among the measures being considered is one that will allow single hedge funds (those that have a single strategy or a single investor, and, therefore, a higher degree of risk) to invest only 49% of their investment corpus in India. Hedge funds are aggressively managed portfolio investments that use strategies such as leveraging, and taking long (a bet that the underlying asset will appreciate), short (that the underlying asset will depreciate) and derivative positions in the markets in order to make high returns.   more »

Indian mutual funds are warming up to the idea of offering quant funds, which use complex mathematical models to pick up stocks, even as globally, quant funds are undergoing a bad patch. Benchmark Asset Management Company Pvt. Ltd will be the second asset management company to offer a quant-based fund after Lotus India Asset Management Company Pvt. Ltd launched the first quant fund, Lotus India Agile Fund, in November. The Benchmark India Value and Momentum Quant Fund is waiting approval from the stock market regulator, Securities and Exchange Board of India. Benchmark’s proposed offering will be an open-ended fund. It will pick up stocks on the basis of a quantitative model designed by Citigroup First Investment Management Ltd (CFIM, a Citigroup Inc. entity. The model, known as Citi India and Value and Momentum strategy, uses complex statistical tools to try and discoverundervalued stocks that have strong price and earningsmomentum.   more »

Most U.S. hedge funds bled red ink in January as tumbling stock markets dealt the loosely regulated portfolios the worst start to a new year since industry analysts began tracking their performance. By mid-January some of the industry's savviest managers including Bruce Kovner, Lee Ainslie and Leon Cooperman were nursing losses at their flagship funds. At the Galleon Technology fund and the Mellon's Global Opportunities and AlphaAccess funds, losses were also very sizable, according to people who saw the numbers but weren't authorized to speak about them. By month's end, the average fund had lost 3.60 percent, data released by BarclayHedge on Thursday show. Data from the Hennessee Group, a competing industry performance tracker, paint only a slightly better picture with hedge funds down 2.8 percent in January after inching up 0.3 percent in December. Last year hedge funds gained 11.6 percent. January's biggest losers were emerging market funds which tumbled 8.81 percent, quickly erasing more than one-third of the 24 percent gain they notched in 2007. Traditionally January has been a strong month for hedge funds, but this year managers were rattled by fears of a possible U.S. recession and fast tumbling stock markets, including one-day losses of over 7 percent in Germany's and India's main exchanges.   more »