This product will use a range of strategies to boost the fund’s risk-adjusted returns. It will complement a core long portfolio, with a range of arbitrage, relative value & special situation strategies that seek to outperform and add to the product’s performance. The fund will also maintain a range of short positions with an aim to manage market volatility from the core long portfolio, but to also generate returns in their own right.
Each idea and strategy will differ, but all will be rigorously researched and checked through a process including screening, research and modelling. Some strategies, such as event driven strategies, may have much shorter lifespans than core long positions, for which the lifespan of the trade may last an entire business cycle.
Risk management will be across the whole spectrum of idea generation to portfolio calibration and management. Each trade idea at inception will be vetted for quality & management risk (specific risk), liquidity risk (high impact costs and position sizing) and historical volatility (position sizing). At the global/portfolio level, the team will closely monitor the risk-adjusted out-performance of every idea (for its given level of market risk, beta), sector and factor risk concentration limits, excessive correlation betweenthe portfolio, net beta weighted market exposure and other risk limits as ordained in the offering document of the product.
However it is expressly clarified that clients are not being offered any guaranteed / assured returns and that the Portfolio Manager only endeavours to manage volatility levels on the basis of the structure / exposures of the portfolio. Long /Short is an investment objective and does not represent a formal guarantee.
The Portfolio Manager may invest in derivatives or any other instrument as may be permitted by SEBI / RBI / such other Regulatory Authority from time to time including Units of Mutual Funds as decided.