Higher taxes dent growth of local hedge funds

Hedge funds in India got a relatively late start, with regulators allowing such investments in 2012

Hedge funds in New York and London fretting about tough times have one consolation: at least they’re not in India.

There, a tax of about a third of income from investments — versus no levy for mutual fund picks held for at least a year — has kept assets managed by hedge funds in the country well below $1 billion and forced money managers to be creative. Take Andrew Holland, the man behind one of India’s first onshore hedge funds, who markets his long-short stock vehicle as an alternative to bonds.

“I can’t compete with equities with that tax,” Holland,