WHAT IS AN ALTERNATIVE INVESTMENT FUND (AIF) ?

An AIF is a privately pooled investment vehicle which can  comprise Indian and foreign investors. The resources are pooled in the form of a trust and the funds are used for investing in a defined asset class and strategy.

Shepherd's Hill Group Pune office

Shepherd’s Hill AIF

Market-Cap Agnostic

The Shepherd’s Hill Alternative Investment Fund, because of its relatively smaller size, is able to take positions in small companies. While the Fund Manager (FM) will consider large, blue chip companies as investments, it will use its size advantage to also find “hidden gems.”

Approximately 15-20 Positions

The AIF will maintain a balance between diversification and focus by holding roughly 15-20 positions in its portfolio. This strategy seeks to avoid the risk of concentrating in just a few positions while seeking to outperform the index or benchmarks.

Sector-Agnostic

FM uses a bottom-up approach to investment management. This strategy dictates a focus on company-level operations and environments. SHFA does not perform macro-economic analysis as it relates to specific investment opportunities. Individual investment decisions are made purely on the merits of the security under consideration.

Indian Securities

Shepherd’s Hill Financial Advisors (SHFA), the FM, has a track record and expertise in the Indian capital markets. Therefore our focus will be primarily on securities of Indian companies that are available for sale in India. The Shepherd’s Hill AIF will invest primarily in Indian equity securities.

FAQ

An Alternative Investment Fund (AIF) is a privately pooled investment vehicle which can comprise Indian and foreign investors. The resources are pooled in the form of a trust and the funds are used for investing in defined asset classes and strategies. The minimum investment subscription amount for an AIF is Rs. 1 crore, and units are issued against subscription amounts, similar to units being issued by a mutual fund.

A Cat III or Category III Alternative Investment Fund is a fund which can employ either diverse or complex trading strategies for investing in listed or unlisted securities and derivatives, including use of leverage. The types of funds which may be included under this category include hedge funds or funds which trade with a view to make short term returns or such other funds with no specific incentives or concessions given by the government or regulator. However, Shepherd’s Hill’s Cat III fund is relatively straightforward and does not invest in derivatives or short-term strategies. Cat III AIF is currently the only viable option for investors in India to invest in public securities through a privately pooled vehicle.

The Shepherd's Hill Investment Process

process-flow-SH
  • Screening and Short-listing. The Fund Manager (FM) will use proprietary screening tools and software to focus on only those companies that it believes merit further research and analysis. With approximately 5,000 listed companies on the Indian exchanges, the FM plans to focus research on a high-quality subset with the goal of achieving operational efficiencies.
  • Checklist Verification. The FM will employ a proprietary checklist it has developed to identify any red flags that appear with respect to a potential investment. Issues for scrutiny include related party transactions, joint ventures, equity or debt investments in other companies, loans and advances that have been written off, exorbitant salaries to managers, and preferential allotments.
  • Financial Analysis. The FM will perform an extensive quantitative analysis with respect to potential investments. The FM will analyse multiple years of publicly available data to create a financial picture covering many facets of operations, including profit margins, return on assets, debt levels, operating leverage, and dividend yields.
  • Qualitative Research. The FM will research and judge the qualitative aspects of each potential investment. Topics relevant to this part of the process include management quality, minority shareholder communication (including quarterly investor calls), business moats, and relationships with suppliers and customers. 
  • Comparative Analysis. When the number of available investment opportunities exceeds the number of investments that the portfolio can contain, the Investment Manager will compare ideas to each other in order to assess the relative attractiveness of each. Considerations relevant to this analysis include over- or under-exposure in an industry sector and perceived correlations between assets.
  • Decision Point. A deliberate decision is taken on choice of portfolio company considering all factors, with price of entry being key.
  • Continuous Portfolio Monitoring. Once an investment decision has been made, the FM will monitor its position continuously. Along with each investment decision, the FM will monitor the entire portfolio in an effort to ensure that any portfolio-level risks are considered and mitigated to the extent possible.

Who Can Invest in Shepherd's Hill AIF?​

Minimum commitment of Rs. 1 cr for Indian, foreign and non-resident Indian (NRI) investors.

5-year commitment.

Cannot be citizens of, or be any other entity which is registered or incorporated, in Pakistan or Bangladesh.

Contact Us

Address

B5, STC Society, NS Phadke Marg, Andheri (E), Mumbai 400069.

Phone: +91 22 2683 6967

Call us: +91-22-2683 6967

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