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Arabian Post
21-07-2025
- Business
- Arabian Post
Analysts in India Redefine Equity Strategy Edge
Foreign institutional investor activity has slowed, but India's equity market is gaining a new level of sophistication thanks to the rapid emergence of long‑short strategies among domestic analysts. With regulatory approval of the Specialised Investment Fund route and increasing recognition of sell‑side research, analysts in India are setting new standards, outperforming peers in major global markets. At the centre of this shift are flagship long‑short funds, enabled by an April amendment that allowed mutual funds to engage in both long and short equity positions via the SIF framework. Industry leaders such as ICICI Prudential, SBI, Quant and ITI Mutual Funds are among the first to roll out these products. This structural innovation, viewed by asset managers as a game‑changer, allows strategic hedging and enhanced alpha generation in volatile conditions. Jatinder Pal Singh, CEO of ITI Mutual Fund, identifies the move as a watershed moment: 'We see a lot of potential in this category similar to what we have seen in alternative investment funds…'. Quantitative and hedge fund entrants—AlphaGrep, Abakkus and Carnelian—are also applying for SIF licences, signalling a rising tide of systematic strategies. ADVERTISEMENT The surge in long-short offerings emerges against a backdrop of changing investor sentiment and derivative market structures. While proprietary traders and retail continue to dominate derivatives trading—accounting for 52.3% and 33.6% respectively—domestic institutional participation remains minimal at just 0.2%. The launch of these funds is expected to usher in broader institutional adoption, reducing reliance on speculative flows. Simultaneously, foreign players are reassessing their exposure. Citigroup downgraded Indian equities to 'neutral' citing stretched valuations and slower earnings growth. Bank of America has flagged valuation concerns as part of seven headwinds to near‑term market performance, though it remains bullish on India's long‑run structural strengths. Morgan Stanley echoes this optimism, describing the market as undervalued and promising for patient investors. At the nexus of these developments, sell‑side analysts play a pivotal role. Their long‑short models provide more nuanced insights, enabling differentiated strategies compared to conventional long‑only approaches. This evolution mirrors practices in advanced markets, where close analyst coverage is integral to informed decision‑making. International observers are taking note. Carson Block, known for his critical research into Chinese markets, is considering launching a long‑short or long‑only fund in India, citing opportunities in corporate transparency and leveraging tax-friendly jurisdictions like GIFT City. His interest signals growing confidence in the depth and potential of India's equity ecosystem. The broader equities landscape reflects these shifts. Foreign institutional investors are ramping up bearish positions in derivatives, signalling caution amid valuation concerns and global uncertainties. Concurrently, new equity supply is expanding, with a surge in IPOs and share sales reflecting a 14% rise in benchmark indices over the preceding six months. Analysts warn that without strong institutional demand, this wave may trigger volatility. ADVERTISEMENT Experts argue the timing could not be better for long‑short funds. As valuations plateau and geopolitical uncertainty remains — including Middle East tensions affecting crude prices — the ability to manage risk through hedging becomes decisive. Fund managers are betting that structured strategies will better manage these headwinds. At the same time, India's growing affluent class—from double‑digit income growth to rising equity allocation—adds tailwinds. Wealth managers like 360 One are expanding advisory services amid rising assets under management, reflecting the country's broader push toward financial sophistication. The development of long‑short funds aligns with these trends, offering differentiated solutions to high‑net‑worth investors seeking yield in uncertain markets. Yet challenges remain. Institutional engagement in derivatives must scale meaningfully to support product viability. Regulators and market infrastructure will need to adapt, ensuring transparency and risk‑management frameworks keep pace. Moreover, investor education is critical; long‑short strategies are complex and require a clear understanding of leverage, margin risk and counterparty exposures. Nonetheless, the direction is clear: Indian equity markets are transitioning from conventional long‑only investing to embrace multi‑directional strategies, leveraging deep local research and structural innovation. With the SIF framework opening doors for long‑short funds, analysts are stepping into roles once reserved for global peers. As Citi tones down enthusiasm and global investors tread cautiously, India's analysts are sharpening tools that could redefine the domestic landscape—and perhaps export this model abroad.
Time of India
16-07-2025
- Business
- Time of India
Indian fund managers line up long-short equity funds for wealthy
At least ten Indian and foreign asset managers plan to launch higher-risk, long-short equity funds to wealthier investors after the regulator approved the strategy earlier this year, according to executives at these firms and public filings. The new category of investment funds were first announced last year as a way to offer sophisticated investors a wider range of options. Under the new rules, which kicked in on April 1, Indian mutual funds can now offer long-short equity funds - where fund managers take both long- and short-positions - under a new category called "Specialised Investment Fund" (SIF) with a minimum investment size of 1 million rupees ($11,663.51). Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Cardiologist Reveals: The Simple Morning Habit for a Flatter Belly After 50! Lulutox Undo ICICI Prudential Mutual Fund, Quant Mutual Fund, SBI Mutual fund and ITI Mutual Fund are already approved to launch the product, according to public disclosures and spokespeople of these firms. The CEOs of Edelweiss Mutual Fund and Mirae Asset Investment Managers, a unit of South Korea's Mirae Asset Financial Group, are awaiting approval to launch a hybrid long-short fund and an equity long-short fund respectively, they confirmed to Reuters. Nippon India mutual fund is awaiting approval to launch a long-short fund. Live Events "We see a lot of potential in this category similar to what we have seen in alternative investment funds who have been able to amass assets with these long-short strategies," said Jatinder Pal Singh, CEO of ITI Mutual Fund. India's 48 asset managers manage 72.20 trillion rupees in assets. Hedge funds and quant firms such as AlphaGrep Investment Management, Abakkus Asset Management, Carnelian Capital, and Ask Investment Managers have applied for mutual fund licences, a prerequisite for launching SIFs, executives at these firms said, declining to be named. The funds did not respond to Reuters emails seeking details. SIFs allow fund managers more independence to structure their funds, said Ashish Gupta, chief investment officer at Axis Mutual Fund, also awaiting regulatory approval to launch SIFs. INSTITUTIONAL PARTICIPATION IN DERIVATIVES These funds are also permitted to trade derivatives and could help increase institutional participation in the derivatives market, where the regulator is seeking to widen the investor base and reduce speculation. "Potentially this could help in reducing the speculative nature of options trading but would depend on strategies being rolled out and how much assets they get," Gupta said. Global trading firms have increased their presence in India's growing derivatives market in the last year, but institutional participation from Indian funds is limited. Proprietary traders made up 52.3% of total derivatives traders as of April, with retail at 33.6%, while domestic institutions - which include mutual funds - made up only 0.2% of total derivative traders, NSE data showed. ($1 = 85.5450 Indian rupees)
Reuters
16-07-2025
- Business
- Reuters
Indian fund managers line up long-short equity funds for wealthy
MUMBAI, July 16 (Reuters) - At least ten Indian and foreign asset managers plan to launch higher-risk, long-short equity funds to wealthier investors after the regulator approved the strategy earlier this year, according to executives at these firms and public filings. The new category of investment funds were first announced last year as a way to offer sophisticated investors a wider range of options. Under the new rules, which kicked in on April 1, Indian mutual funds can now offer long-short equity funds - where fund managers take both long- and short-positions - under a new category called "Specialised Investment Fund" (SIF) with a minimum investment size of 1 million rupees ($11,663.51). ICICI Prudential Mutual Fund, Quant Mutual Fund, SBI Mutual fund and ITI Mutual Fund are already approved to launch the product, according to public disclosures and spokespeople of these firms. The CEOs of Edelweiss Mutual Fund and Mirae Asset Investment Managers, a unit of South Korea's Mirae Asset Financial Group, are awaiting approval to launch a hybrid long-short fund and an equity long-short fund respectively, they confirmed to Reuters. Nippon India mutual fund is awaiting approval to launch a long-short fund. "We see a lot of potential in this category similar to what we have seen in alternative investment funds who have been able to amass assets with these long-short strategies," said Jatinder Pal Singh, CEO of ITI Mutual Fund. India's 48 asset managers manage 72.20 trillion rupees in assets. Hedge funds and quant firms such as AlphaGrep Investment Management, Abakkus Asset Management, Carnelian Capital, and Ask Investment Managers have applied for mutual fund licences, a prerequisite for launching SIFs, executives at these firms said, declining to be named. The funds did not respond to Reuters emails seeking details. SIFs allow fund managers more independence to structure their funds, said Ashish Gupta, chief investment officer at Axis Mutual Fund, also awaiting regulatory approval to launch SIFs. These funds are also permitted to trade derivatives and could help increase institutional participation in the derivatives market, where the regulator is seeking to widen the investor base and reduce speculation. "Potentially this could help in reducing the speculative nature of options trading but would depend on strategies being rolled out and how much assets they get," Gupta said. Global trading firms have increased their presence in India's growing derivatives market in the last year, but institutional participation from Indian funds is limited. Proprietary traders made up 52.3% of total derivatives traders as of April, with retail at 33.6%, while domestic institutions - which include mutual funds - made up only 0.2% of total derivative traders, NSE data showed. ($1 = 85.5450 Indian rupees)
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Business Standard
10-06-2025
- Business
- Business Standard
Inflow into equity MFs hits 13-month low at Rs 19,000 cr in May
Inflow in equity mutual funds slumped to its lowest level in 13 months to Rs 19,013 crore in May, with large-cap, mid-cap and small-cap funds experiencing lowered inflows, primarily triggered by profit booking by investors. This also marks the fifth consecutive month of decline in inflow in equity funds and nearly 22 per cent drop in net inflow on a month-on-month basis from Rs 24,269 crore registered in April, according to data released by the Association of Mutual Funds in India (Amfi) on Tuesday. Despite the deceleration, May marked the 51st consecutive month of positive flows into equity-oriented schemes, reflecting sustained investor confidence. Also, systematic investment plan (SIP) contributions remained robust, registering a record Rs 26,688 crore in inflows in May, higher than Rs 26,632 crore in the preceding month. Overall, the mutual fund industry experienced an infusion of over Rs 29,000 crore in May compared to Rs 2.77 lakh crore in the preceding month. The inflow has lifted the industry's assets under management to a record Rs 72.2 lakh crore as of May from Rs 70 lakh crore in April-end. According to the data, equity-oriented mutual funds saw an inflow of Rs 19,013 crore in May, making it the lowest level since April 2024, when such funds experienced an inflow of Rs 18,917 crore. Such funds witnessed an inflow of Rs 24,269 crore in April, Rs 25,082 crore in March, Rs 29,303 crore in February, Rs 39,688 crore in January, and Rs 41,156 crore in December. "The slowdown in net equity inflows can be attributed to several factors, including a rise in equity market performance in May 2025, and a potential phase of consolidation or profit booking by investors. "Additionally, rising global volatility -- triggered by geopolitical tensions following India's launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation -- fuelled a risk-off sentiment among certain investors," ITI Mutual Fund CEO Jatinder Pal Singh said. Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, also attributed the slowdown in equity inflows to a mix of factors -- a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations. While the equity markets continued their upward momentum in May, gains were relatively subdued. Within the equity fund categories, Flexi Cap Funds recorded the highest inflows in May, attracting Rs 3,841 crore. However, equity-linked saving schemes saw an outflow of Rs 678 crore. Besides, value funds and dividend yield funds experienced an outflow of Rs 92 crore and Rs 21 crore, respectively. Large-cap funds witnessed inflows of Rs 1,250 crore in May, a decline from Rs 2,671 crore in April. Mid-cap funds saw inflows reducing to Rs 2,808 crore in May, compared to Rs 3,313 crore in the previous month. Similarly, small-cap funds attracted Rs 3,214 crore in May, down from Rs 3,999 crore in April. "Large-cap allocations have cooled sharply as investors are recalibrating their risk-reward expectations. The relatively modest decline in small and mid-cap inflows suggests that the appetite for growth stories remains intact, though tempered by valuation consciousness. The pause should help earnings catch up with prices and create healthier entry points," Anoop Vijaykumar, Head of equity, Capitalmind MF, said. Apart from equities, gold exchange traded funds (ETFs) recorded a net inflow of Rs 292 crore in May, an improvement from the marginal outflow of nearly Rs 6 crore in April. On the other hand, debt funds registered an outflow of Rs 15,908 crore in the month under review after seeing a staggering inflow of Rs 2.2 lakh crore in April. "This was primarily driven by a big swing in net flows in debt-oriented schemes. A net inflow of Rs 2.19 lakh crore in April and May 2025 saw a net outflow of just under Rs 16,000 crore in debt schemes mainly at the shorter end of maturity as monetary easing was widely expected," Harshad Patwardhan, Chief Investment Officer at Union Asset Management Company, said. Corporate bond funds were the only category to see a big jump in net inflows as investors positioned themselves ahead of the policy announcement.
The Hindu
10-06-2025
- Business
- The Hindu
Inflow into equity MFs hits 13-month low at ₹19,000 crore in May
Inflow in equity mutual funds slumped to its lowest level in 13 months to ₹19,013 crore in May, with large-cap, mid-cap and small-cap funds experiencing lowered inflows, primarily triggered by profit booking by investors. This also marks the fifth consecutive month of decline in inflow in equity funds and nearly 22% drop in net inflow on a month-on-month basis from ₹24,269 crore registered in April, according to data released by the Association of Mutual Funds in India (Amfi) on Tuesday (June 10, 2025). Despite the deceleration, May marked the 51st consecutive month of positive flows into equity-oriented schemes, reflecting sustained investor confidence. Also, systematic investment plan (SIP) contributions remained robust, registering a record ₹26,688 crore in inflows in May, higher than ₹26,632 crore in the preceding month. Overall, the mutual fund industry experienced an infusion of over ₹29,000 crore in May compared to ₹2.77 lakh crore in the preceding month. The inflow has lifted the industry's assets under management to a record ₹72.2 lakh crore as of May from ₹70 lakh crore in April-end. According to the data, equity-oriented mutual funds saw an inflow of ₹19,013 crore in May, making it the lowest level since April 2024, when such funds experienced an inflow of ₹18,917 crore. Such funds witnessed an inflow of ₹24,269 crore in April, ₹25,082 crore in March, ₹29,303 crore in February, ₹39,688 crore in January, and ₹41,156 crore in December. 'The slowdown in net equity inflows can be attributed to several factors, including a rise in equity market performance in May 2025, and a potential phase of consolidation or profit booking by investors. 'Additionally, rising global volatility – triggered by geopolitical tensions following India's launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation – fuelled a risk-off sentiment among certain investors,' ITI Mutual Fund CEO Jatinder Pal Singh said. Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, also attributed the slowdown in equity inflows to a mix of factors – a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations. While the equity markets continued their upward momentum in May, gains were relatively subdued. Within the equity fund categories, Flexi Cap Funds recorded the highest inflows in May, attracting ₹3,841 crore. However, equity-linked saving schemes saw an outflow of ₹678 crore. Besides, value funds and dividend yield funds experienced an outflow of ₹92 crore and ₹21 crore, respectively. Large-cap funds witnessed inflows of ₹1,250 crore in May, a decline from ₹2,671 crore in April. Mid-cap funds saw inflows reducing to ₹2,808 crore in May, compared to ₹3,313 crore in the previous month. Similarly, small-cap funds attracted ₹3,214 crore in May, down from ₹3,999 crore in April. 'Large-cap allocations have cooled sharply as investors are recalibrating their risk-reward expectations. The relatively modest decline in small and mid-cap inflows suggests that the appetite for growth stories remains intact, though tempered by valuation consciousness. The pause should help earnings catch up with prices and create healthier entry points,' Anoop Vijaykumar, Head of equity, Capitalmind MF, said. Apart from equities, gold exchange traded funds (ETFs) recorded a net inflow of ₹292 crore in May, an improvement from the marginal outflow of nearly ₹6 crore in April. On the other hand, debt funds registered an outflow of ₹15,908 crore in the month under review after seeing a staggering inflow of ₹2.2 lakh crore in April. 'This was primarily driven by a big swing in net flows in debt-oriented schemes. A net inflow of ₹2.19 lakh crore in April and May 2025 saw a net outflow of just under ₹16,000 crore in debt schemes mainly at the shorter end of maturity as monetary easing was widely expected,' Harshad Patwardhan, Chief Investment Officer at Union Asset Management Company, said. Corporate bond funds were the only category to see a big jump in net inflows as investors positioned themselves ahead of the policy announcement.
