Despite the subcontinent's emerging market reputation, India-focused funds are facing challenges in gaining interest from global investors, a sector report from institutional data provider eVestment has found.
Based on a study of eight funds of hedge funds that allocate solely to India-focused funds, the report found that India-focused funds had lost -2.98 per cent in the first four months of 2013, underperforming against the hedge fund aggregate.
Estimated assets under management in India-focused funds dropped 7.3 per cent through the first three months of 2013 to an estimated US$6.7 billion, although early indications for April show a slight rebound in asset levels with new allocations growing.
The report said the top priority for investors remained the capacity to generate quantifiable out-performance, but India's current macro-environment and sluggish economy as of late might be keeping investors from committing to illiquid emerging markets (EM).
This resulted in cumulative net investor outflows from EM funds of US$440 million year-to-date, according to the study.
"The value of India funds for hedge fund investors appears to remain in question," eVestment said.
