Dolat Capital Market has launched the country’s first hedge fund under Category-III Alternative Investment Fund on LLP (limited liability partnership) structure which attracts a lower tax of 35 per cent.

Currently, most hedge funds in India are set up either as Trust or a company which are taxed at 43 per cent.

The Dolat Absolute Return LLP plans to raise ₹250 crore and attract high net worth debt fund investors with a minimum investment of ₹1 crore.

Globally, limited partnerships are quite popular as fund structures for investment in securities.

Any distributions made to the investors out of tax paid income are exempt in the hands of the investors. The fund provides one of the most efficient and simple taxation structure currently available for Category-III investors who invests in derivative-based hedge funds, said Amit Saxena, Director and Head Alternative Investment Funds, Dolat Capital Market.

The fund intends to generate stable and consistent absolute returns, irrespective of equity and fixed income market conditions. The annualised gross target return of the fund is 12-14 per cent CAGR, he said. It aims to significantly minimise capital risk and generate consistent returns with extremely low correlation with equity and fixed income market. The base hurdle rate of the fund is 365 days SBI Bulk FD (1 crore above) rate + 200 bps points.