Finideas Growth Fund – Category III AIF

The investment objectives of the Finideas Growth Fund, a category III AIF, are to invest in indices with protection. The fund leverages India’s growth by investing in the country’s indices and also benefits from the growth of the Indian banking system by investing in bank indices. Hedging with options helps protect wealth during market downturns and increases profitability by adding new units at lower levels.

The philosophy of the Finideas Growth Fund is grounded in a strategic blend of prudent investment practices designed to optimize growth potential while mitigating risks. Here’s a detailed exploration of the key principles guiding the fund’s approach:

Investment in Index: The cornerstone of the Finideas Growth Fund’s strategy is its investment in the Nifty50 and BankNifty indices. These indices represent a curated portfolio of top companies within the country or sector. By investing in these indices, the fund taps into the inherent resilience and growth prospects of leading businesses. Unlike individual stocks, an index never reaches zero value due to its diversified nature. Over time, the index is poised to appreciate as it comprises companies selected based on their free float market capitalizations, reflecting the overall economic growth trajectory.

Growth using Leverage: To enhance potential returns, the Finideas Growth Fund employs leverage, utilizing 2x leverage through the purchase of Futures contracts of the Nifty50 and BankNifty indices. Leverage amplifies gains during market upswings, magnifying the fund’s profitability. This strategic use of leverage allows the fund to capitalize on bullish market trends effectively.

Lower Cost by Interest Arbitrage: An innovative aspect of the Finideas Growth Fund’s approach is its utilization of interest arbitrage to optimize costs. By leveraging funds equivalent to the leverage value elsewhere to generate secure returns, the fund effectively reduces its overall cost. This cost-cutting measure not only enhances the fund’s profitability but also ensures efficient capital allocation, maximizing returns for investors.

Hedging Through Options: Recognizing the importance of risk management, the Finideas Growth Fund incorporates hedging strategies using short-term and long-term options of the Nifty50 and BankNifty indices. Hedging through options serves multiple purposes: it limits downside risk during adverse market conditions, thereby safeguarding the fund’s capital. Additionally, options hedging allows the fund to capitalize on market downturns by strategically adding more units at lower price levels, thereby enhancing the potential for profitability over the long term.

By adhering to these guiding principles, the Finideas Growth Fund aims to deliver sustainable growth while prudently managing risk. Through its strategic investment in indices, prudent use of leverage, innovative cost-saving measures, and robust risk management strategies, the fund endeavors to create value for investors and navigate the dynamic landscape of the financial markets effectively.

The investment strategy of the Finideas Growth Fund, An AIF category 3, is designed to optimize growth potential while mitigating risks through a diversified approach:

75% Long Position in Nifty50:

This allocation involves investing in the top 50 companies of India, representing a diverse cross-section of industries.
By participating in India’s growth journey through these prominent companies, the fund aligns itself with the nation’s economic expansion.

25% Long Position in BankNifty:

This segment focuses on investing in top banking companies, leveraging the strengths of the banking sector.
By capitalizing on the stability and growth potential of the banking industry, this allocation aims to enhance overall portfolio performance.

2X Leverage:

Utilizing 2x leverage through Future Contracts enables the fund to amplify potential profits, especially during market upswings.
This strategic use of leverage enhances returns by effectively doubling the exposure to market movements.

Hedging 100% Position with Long Options:

Hedging the entire position with long options provides downside protection during market downturns, safeguarding the fund’s capital.
Additionally, this approach allows for the strategic accumulation of additional units at lower price levels, maximizing long-term profitability.

Interest Arbitrage:

Investors have the flexibility to allocate the remaining amount to debt funds, earning extra interest.
This interest arbitrage opportunity helps reduce overall costs by leveraging the exposure value of Futures contracts.
Through this balanced approach of long positions in Nifty50 and BankNifty, strategic leverage, comprehensive hedging with long options, and interest arbitrage, the Finideas Growth Fund aims to deliver optimal returns while effectively managing risks for investors.