Round the globe, hedge funds form a major portion of high net worth (HNW) investor portfolios. In India, the Securities Exchange Board of India (Sebi) opened the doors to hedge funds in July 2012 through the alternative investment fund (AIF) norms. So far, a dozen hedge funds have registered with Sebi. The funds use alternative strategies largely uncorrelated to the market to build portfolios of debt, gold, art, equity, and currency derivatives. Says Andrew Holland, chief executive officer (CEO), investment advisory, Ambit Investment Advisors: “If you invest in equity mutual funds and the market falls by 5 per cent, your investments would fall too. But a hedge fund makes absolute returns whether the market is going up, down or sideways.” Traditional investments inherit the market’s volatility due to their correlation to markets. So, hedge funds have started garnering investments.