Helios India Long/Short Fund

• • General Range of net (Long-Short) exposure: 30% to 90%
  • General Range of Gross (Long + Short) exposure: 75% to 175%
  • General Range of Long side exposure: 60% to 120%
  • Range of Short side exposure: 10% to 60%

• The fund’s primary strategy will be too short individual stocks on India’s highly liquid futures markets.
• In contrast to long portfolios, which could have sector biases, shorts will be sector-neutral.
• Positions will normally be kept for three to twelve months for single stock futures selected from the bottom up.
• In most cases, the fund will hold 15 to 25 positions, each with a weight of 1.0% to 2.0%.
• Most common factors for shorting:
  • High/unsustainable leverage
  • Regulatory developments
  • Price-based competition
  • Expected disappointments in earnings
  • Declining growth at very high valuations
  • The overhang of government divestment etc

• Consider investing in subjects that exhibit “Non-zero-sum competition” with relatively low penetration, competition with government-owned firms, significant tailwinds, and a long runway for secular growth
• Even while 10-15% of the portfolio may not (at any moment) be in favoured themes, it should nonetheless provide value or a trigger
• Two tiers of rejection The whole cosmos is first condensed to the “Helios research universe.” To reach the list of “stocks that cannot be rejected on any factor,” the second level of rejection is performed within the “Helios research universe.”
• Further bottom-up analysis to arrive at a “to OWN” list
• Valuation philosophy:

The robust portfolio needs to have 2 kinds of stocks:

• High confidence in reasonable returns
• Reasonable confidence in high returns

• Number of longs: 30-50; Number of individual stock shorts: 15-25

• Liquidity restrictions for at least 60% of the portfolio
• Portfolio: with at least six different industries represented, Maximum industry weight of 35% (cash positions + net of futures contracts) of net assets; maximum weight in one stock of 10% (in practise less than 7.5%).
• Short exposure: Mostly through futures on a single stock. Using options sparingly or selling indices/sub-indices
• General Gross exposure range: 75-175%
• General Net exposure range: 30-90%
• Maximum exposures allowed: Gross: 200% & Net: 150%

• The fund’s primary strategy will be shorting individual companies on India’s extremely liquid futures markets.
• In contrast to long portfolios, which might have sector preferences, shorts will be sector-neutral.
• Positions will typically be held for three to twelve months for single stock futures selected from the bottom up.
• In most cases, the fund will hold 15 to 25 positions, each with a weight of 1.0% to 2.0%.

• Diversification among industries, across the capitalization spectrum, and in terms of growth and value can lower the risk from any one factor
• Limits on a person’s exposure to stocks are 10% of net assets for long holdings and 4% of net assets for short positions. No additional investment should be made in long holdings over 7.5% and short ones over 3%-3.5%.
• Top 250 companies with “liquid” trading volume over the previous six months
• No new investments may be made in stocks that are not deemed to be “liquid” up to a maximum appreciation of 50% based on the performance of the group. Investment in each of these stocks is limited to 4.0%, with a maximum increase of 6.0% depending on performance.
• Underperforming stocks are continually reviewed, but there are no formal stop-loss rules.