Hedge fund Marshall Wace braces for debut

London-based equity hedge fund group Marshall Wace Asset Management LLP, one of the largest hedge funds in the world with over $2 billion in assets under management, has registered itself with the Securities and Exchange Board of India (Sebi).

The hedge fund got its registration on August 5.

Incidentally, the hedge fund has registered itself as an foreign institutional investor, taking the total number of registered foreign institutional investors (FIIs) to 594.

Current Sebi regulations do not allow hedge funds to register. Sebi is working on a concept paper for allowing hedge funds to register, and the final guidelines are expected soon.

Marshall Wace also manages the award-winning Eureka Fund and Eureka Interactive, Europe's largest tech, media, technology (TMT) sector hedge fund.

Though there are some smaller hedge funds registered with the capital markets regulator as foreign portfolio investors , none of them has the asset base to match Marshall Wace's, which is among the more prominent and reputed entities in this category to enter India in recent times.

During this month itself two more FIIs have registered themselves "" Frank Russell, a pension fund, and Goldman Sachs Asset Management.

The hedge fund was founded in 1997 by Paul Marshall and Ian Wace.

They are ranked No.9 in London capital markets' richest list with both owning £162 million in assets each. Marshall was formerly a director with Mercury Asset Management, which he joined in 1995.

Wace is a financier. In fact, last year both founders shared £26 million in wages and dividends which resulted in around a couple of dozen employees in the hedge funds turning into millionaires.

According to information from the fund's website, the hedge fund investment strategy is based on a complex mathematical model, which a number of other hedge fund managers have been trying to emulate.

The Eureka Interactive Fund follows a "long-short equity strategy" which essentially is a directional strategy involving equity-oriented investing on both the long and short sides of the market.

The objective is not to be market neutral. Managers have the ability to shift from value to growth, from small to medium to large capitalisation stocks, and switch from a net long position to a net short position.

Managers can also futures and options to hedge. The focus may be regional or sector specific.