Avendus (Cat3)

Funds managed

Fund name	Asset Class	License
Avendus Absolute Return Fund	Long short in equity and indices	SEBI AIF Cat 3
Avendus Enhanced Return Fund	Long short (long bias)	SEBI AIF Cat 3
Avendus India ESG Fund	Long only(ESG)	SEBI AIF Cat 3
Avendus Long Short India Equity	Long Short(long biased)	Offshore fund

About the AMC

• Established in 1999
• Avendus Capital Incorporation and Avendus Capital (UK) Private Limited located in New York and London respectively are wholly owned subsidiaries of Avendus Capital Pvt Ltd, India.
• The fund led by one of India’s marquee fund managers – Andrew Holland and Vaibhav Sanghvi successfully managed equity, based on positive absolute return strategies with a view of low volatility, for over 10 years in all market scenarios.  
• Fund managers –

Avendus Absolute Return Fund and Avendus Enhanced Return Fund – 

Vaibhav Sanghvi ,Co-CEO for Avendus Capital Public Markets Alternate Strategies LLP (prior work ex- 8 yrs at Ambit Investment advisor as MD),

 Piyush Shah, Director with Avendus Capital Public Markets Alternate Strategies LLP (prior work ex-founding team at Ambit Asset Management that was instrumental in AMC business that included Ambit Alpha Fund), 

Tarun Kewalraman, Director with Avendus Capital Public Markets Alternate Strategies LLP(prior work ex- Fund Manager at Ambit Asset Management)

Avendus India ESG Fund- Abhay Laijawala is Managing Director and Fund Manager at Avendus Capital Public markets Alternate Strategies LLP(Prior to joining Avendus  he was the Managing Director and Head of Equity Research ,Deutsche Bank)

Avendus Long Short India Equity- All the above fund managers.

Investment Philosophy 

1. Avendus Absolute Return Fund- 

• The fund’s long-short strategy is intended to produce absolute returns with less volatility than the overall stock market and low correlation to conventional asset classes, across a variety of market scenarios. 

2. Avendus Enhanced Return Fund-

• Avendus Enhanced Return Fund is a long only scheme targeting high alpha and low beta. The fund endeavors to outperform the Nifty 50 index and minimize downside. 
• It will invest ~70% of the proceeds in the long only portfolio, to ensure high alpha, and ~30% in long-short portfolio, to ensure a lower beta. 

3. Avendus India ESG Fund –  

• The fund’s long only strategy seeks to invest in a portfolio of around 15-20 high conviction stocks based on predetermined ESG and proprietary fundamental criteria.
• By integrating ESG factors alongside mainstream company analysis, we aim to identify risks and opportunities that may not have been fully priced in by markets and which may enhance stock selection.

4. Avendus Long Short India Equity-

• Avendus Long Short India Equity Fund is an offshore fund structured as an Irish Collective Asset Management Vehicle (ICAV) and domiciled in Dublin.
• This fund is based on the similar strategy as our onshore Avendus Enhanced Return Fund
• Avendus Long Short India Equity Fund is a long biased Long Short Fund targeting high alpha and low beta. The fund endeavors to outperform the DEFTY Index (Nifty 50 USD Index) while limiting downside
• The fund will invest 70% of the proceeds in a portfolio of 15-25 high conviction primarily large cap stocks based on a proprietary screener model. The balance 30% of funds will be utilised in a long/short portfolio to limit downside or enhance returns depending on market conditions.

Media

Topic- Vaibhav Sanghavi (Avendus Capital Public Markets Alternate Strategies LLP) at MOCA 2020, Media platform name – Motilal Oswal Financial services ltd (youtube), Date- March, 2020

Vaibhav Sanghavi discussed the need for AIF in the existing long only market. Reason being in turbulent time when the market experiences huge drawdown for e.g. in 2002, 2008-09, long only position experience huge volatility, whereas long short funds helps to reduce the volatility. Protecting downside risk enables us to generate alpha. Long short produces same amount of return but with lower risk (risk adjusted return). India has a robust derivatives market which enables to hedge is an effective manner.

Topic- Avendus Absolute and Enhanced return fund

 Media platform name-Motilal oswal private wealth management (youtube)

 Date-may7, 2018

There are two kinds of risk market and company specific risk, when investing in long short equity market specific risk is essentially mitigated. Avendus absolute return fund aims to generate absolute returns irrespective of market conditions whereas  Avendus enhance fund is a relative return strategy aims to achieve 1.5 times of nifty when nifty goes up and restrict its downside by 1/3 of nifty (returns are equity + , whereas risk is equity -). 70% high quality stocks based on operating cash flow, rest 30%multipurpose objective.

Analyst questions

1. What kind of mindset / skill set fundamental or technical is required to manage a long short fund, how is it different from a long only fund?
2. Long short being a recent launch in the Indian markets how do you target investors? And who are your target investors?
3. There are many long short funds in the India market how is absolute and enhanced long short fund provided by Avendus different from the other long short funds in the market? 
4. How do you measure and mitigate the risk while managing a long short fund?
5. Do you make calls based on short term market outlook while managing these funds?
6. There are various hedge fund (AIF CAT3) strategies, are you planning to come up with a fund based on a strategy different from the existing funds?

My opinion based on media interview on their investment strategy of different fund- Avendus is a soft catalyst , they will resort to cash instead  of risking the money , also majorly they invest in quality stocks based on operating cash flow, seems like a stock picker.

Prepared By – Vanshika Bagrecha 

Peer reviewed by – Ridhima Jaisinghani

Date – 12th May