IIM Lucknow students' fund outperforms benchmarks

At a time when professionally managed funds are struggling to beat their benchmarks, a fund floated by the students of IIM Lucknow, has managed to beat the Nifty, giving returns of 17.96 per cent for one-year period ending January 2011.

The fund, called Credence Capital, is an annually launched fund by the institute, where the investors are the students themselves. The fund managed by select students of batch 2009-2011 beat the Nifty with 17.96 per cent returns, during the period when the benchmark gave returns of 5.56 per cent.

First incorporated in 2007, the fund has now become an annual initiative taken by the in-coming batch of students. Each batch has around 400 students.

The fund consists of two schemes — the equity and the derivatives schemes. The equity scheme has a moderate risk exposure and moderate returns, while the derivatives scheme, which bets on futures of derivatives, is slightly risky with better returns.

“Though there is no particular investment strategy here, we aim at finding opportunities by diversifying the portfolio, depending on market conditions, and dealing with all sectors,” said Mr Manish Gupta, one of the fund managers of Credence Capital for the batch 2010-2012.

The average corpus of the funds is around Rs 5 lakh during the duration, which is two years. At the end of the two years, with the passing out of the batch, the funds are liquidated.

For the fund initiated by the 2009-2011 batch, the minimum amount contributed was Rs 5,000, with an upper limit of Rs 50,000.

The fund is managed by a core team of 11-member students of the institute who are chosen via a month-long selection process. The fund is routed via a stock broker and is modelled as a mutual fund.

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