Frequently Asked Questions

If you have risk concerns, Lama is the best to invest your money in. Last year Lama's portfolio generated a compounded return of 78.1%, despite the prevailing high market volatility. It has far outperformed the market as compared to its peers.

The investment approach is pretty simple. Only quantitative trades with high win rates of 90% are structured. The strategies are thoroughly back tested and live market simulation is performed before deploying them.

All the portfolios are managed along the same guidelines, including the company's personal funds. Trade executions in a portfolio are done as per the investor's risk appetite. Moreover, as additional protection and portfolio insurance, a certain part of the margin is generally kept unused.

As they say, the proof is in the pudding. If you are concerned about large market moves, as a sample, last year the market went up over 10% in a short burst (in less than 30 days) and moved down by approximately 7% (in less than 15 days); yet Lama had such high demonstrated returns. Recently too the market fell by 11% and still the strategies are performing great.

Lama Capital, in its brochure clearly mentions the monthly returns data along with drawdowns from each investment source, which is not a standard for the Hedge Fund industry. The most granular they usually provide is quarterly data. This shows its belief in extreme transparency.

Also all the accounts are made in your name as a Demat account, in the custody of Lama's partner broker so that they can be used as collateral. You can see your trades and ledgers on a regular basis.

Derivatives provide monthly returns which you can choose to reinvest or take payouts on quarterly basis. It is recommended that you reinvest so that the portfolio grows and also you receive compounded returns. Such compounded returns benefit is not provided by the stocks.

They also allow us to hedge your portfolio (which means protect against sudden and violent up or down moves of the market).

The answer is Arbitrage. Arbitrage is taking advantage of very short term mispricing of assets, and dislocations in the market. In highly simple terms it essentially is to buy(sell) a product or its derivative in one market and sell(buy) the same in another market at a higher(lower) price.

In Lama only those trades are undertaken where there exists such kind of mismatches in the market. Therefore the approach is non-directional, irrespective of where the market will move next; Lama traders just act very quickly and strategically on opportunities that are already available. Our proprietary technology and algorithmic trading enables this to be done in a very efficient manner.

It is a strategy wherein the price inefficiencies between securities in a market is exploited.

Volatility arbitrage is a strategy that exploits the difference between forecasted future volatility of asset and implied volatility of options on that asset.

Lama basically deals in three kinds of portfolio which can be modified as per the investor's risk-reward preference:

• Alpha portfolio: It is the most aggressive of Lama's offerings. It is designed using a mixture of stocks depending on the investor's choice. Since there is a high market exposure, returns on Lama Alpha are the highest.
• Hybrid portfolio: It is for the investors who seek partial participation in equity market. A significant amount is vested in Fixed Deposits that earn an average annualised return of 9%.
• All Weather portfolio: This portfolio is the best for investors who are highly risk averse. The entire amount is invested in Fixed deposits or Indian sovereign bonds which is used as a collateral for derivative trading.
• Customized portfolios: In addition to these, the portfolios can be customized for highly risk averse clients (or IRA and retirement accounts) comprising only of defined risk strategies providing compounded returns of ~20-25% p.a.

Setting up a managed account with Lama is simple and clear. Since we are an investment advisory firm, we trade on your account on your behalf. A demat account is setup with our partner broker in your name (or your company's name), you provide a written approval to the broker that we can access and trade on your account (in the form of power of attorney, for Indian clients).

You have access to all the transactions, positions, and charges on your account from the broker's web portal. You can also see all the trading activity and your profit/loss statement in live market environment. The account is in your name, and you have complete clarity and control. We can only charge you the performance fees after you have received profits in your account.

Lama is in the process of getting accredited by Morningstar, Crisil and other independent ratings agencies. We are expecting a high investment rating given that our portfolio's SHARPE ratios (it tells the risk adjusted returns) are pretty high, in comparison to the benchmark index like Barclays' Hedge Fund Index which includes European based funds.