Fund floated by IIM-Lucknow students beats meltdown

BALASUBRAMANYA B N (CCI STUDENT....) (44679 Points)

05 February 2009

LUCKNOW: The global meltdown may have bled corporate powerhouses to bankruptcy, but a group of budding managers at a premier management

institute here have beaten the downturn to make a pile of money.

Credence Capital, a mutual fund set up by students of the Indian Institute of Management-Lucknow (IIM-L) for fellow students, has seen its corpus double in less than two years.

"We started with an initial investment of Rs.300,000 in August 2007, and despite the meltdown, the fund's corpus has now increased to Rs.600,000," claimed Hrishab Sanghvi, fund manager at Credence Capital.

"We had set up this venture simply to gain a first-hand experience of running a mutual fund, and the fact that we have been able to beat the current recession proves we are on the right track," Sanghvi, a second year post-graduate student at IIM-L, told IANS.

"When we took into account our overall performance until January 2009, we found we had made a profit of about 157 percent in derivatives," said Sanghvi, who said he owes the success to the guidance of his parents, both of whom are members of the Bombay Stock Exchange.

Added Fellow student, Aditi Garg, closely involved with Credence: "When we took off, our net asset value (NAV) stood at just about 10 for derivatives; today, the figure has shot up to 25.7."

NAV is the value of a single mutual fund share, based on the market value of all securities it owns, minus its total liabilities and divided by the total number of shares issued.

According to Garg, the fund has managed to maintain a marginal profit even in the equities segment, that has taken a beating on the bourses on account of several factors including slowdown.

"Our NAV for equities was just about 10 when we started, but despite the unprecedented recession, it still stood at 10.7," she said.

The fund's success has begun to attract more student investors, whose number has now swollen to 60.

Sanghvi and others involved with Credence attribute much of their success to a member of the faculty, Professor Vipul, who they said has been their "friend, philosopher and guide in putting the whole thing on ground".

The professor was, however, not available for comment.