The Inynergy absolute India fund is managed for Insynergy by Reliance Asset Management, a subsidiary of Indian firm Reliance Capital Asset Management. Portfolio manager Ashish Mehta, who has over 15 years experience in Indian equities, will run it as an unconstrained fund of 20 to 50 holdings. The aim is to generate positive returns from Indian equities in the long term while preserving capital and making money from the losers in difficult markets.
To achieve this, Mehta will hold companies that are expected to increase in value but he will also take short positions using derivatives. Shorting involves borrowing stocks that look likely to fall in value, selling them, and making a profit by buying them back when the price has fallen. As a Ucits III fund, the Insynergy fund cannot short stocks directly, but it can recreate the strategy using derivatives. This is known as synthetic shorting and Mehta can short up to 30 per cent of the fund’s NAV using this strategy.
Insynergy says around 70 per cent of the Fund’s portfolio will follow the investment strategy of the Reliance growth fund, an Indian fund on which the Insynergy portfolio is based. The remaining 30 per cent of the portfolio will focus on high conviction best ideas, typically in small and medium sized firms that are to small for the Reliance growth fund.
Rapid growth in India makes the country an attractive long-term investment proposition. Indian funds are offered by firms including HSBC, Henderson, Fidelity, Neptune and First State, but Insynergy carves a niche through its use of synthetic shorting. This feature provides a bridge between long only Indian funds and hedge funds that are only available to high-net worth and institutional investors, but it may not appeal to some investors.
The fund could attract investors who want pure exposure to India with full Ucits investment powers, but some may prefer exposure through a Bric or global emerging markets fund.