Quant Mutual Fund set to launch two new SIFs

Summary: qsif has filed two long-short equity funds under SEBI’s new Specialized Investment Fund (SIF) framework. While the first offers a broad-based strategy across market caps, the second will primarily target mid and small-cap opportunities, with both using derivatives to manage risk and enhance returns.

Quant Mutual Fund, through its Specialized Investment Fund (qsif), will be launching two new strategies: qsif Equity Long Short Fund and qsif Equity Ex-Top 100 Long-Short Fund.

It has filed its two-offer document with the Securities and Exchange Board of India (SEBI), which marks the first product filing under the new SIF framework. Under SEBI’s framework, SIFs are allowed to adopt a range of strategies and the minimum investment amount is at least Rs 10 lakh.

Several other fund houses, such as Edelweiss, Mirae Asset and SBI, have already announced launching their SIFs.

So far, SEBI has approved seven distinct strategies under SIFs, divided across three broad categories in equity, debt and hybrid segments. In the equity segment, there are three strategies, such as the equity long-short fund, the equity ex-top 100 long-short fund and the sector rotation long-short fund. Quant has filed documents for the first two categories.

About qsif Equity Long-Short Fund

The qsif Equity Long-Short Fund will mainly invest across large-, mid- and small-cap stocks. At least 80 per cent of the portfolio will be in equities.  To balance risk and enhance returns, the fund will also take short positions of up to 25 per cent through derivatives (futures and options). Shorting basically allows investors to earn returns even when the stocks fall. Which means the fund will buy shares it expects to go up (long) and go down (short). This way, it can try to make money whether the market is rising or falling.
In addition, up to 20 per cent may be parked in debt and money market instruments to manage liquidity and meet margin requirements.

This fund will be benchmarked against the Nifty 500 Total Return Index (TRI).

About qsif Equity Ex-Top 100 Long-Short Fund

This fund will look to capture opportunities in the mid- and small-cap universe by investing at least 65 per cent of its portfolio in stocks outside the top 100 by market capitalisation, while up to 35 per cent may still be allocated to large-cap equities (top 100 stocks) or debt, giving it flexibility.

Like the first fund, it can use derivatives to short stocks and capitalise on declining stock prices.

To manage risk in the mid- and small-cap space, the scheme will deploy a variety of derivative strategies, from simple short futures to more structured trades like bear spreads and synthetic shorts.

Conclusion

Quant Mutual Fund’s dual filings highlight how fund houses are gearing up to use SEBI’s new SIF framework to deliver more dynamic, risk-managed equity strategies. For investors, these funds open up avenues beyond conventional long-only equity products.

However, these products are aimed squarely at sophisticated investors who understand the complexities of derivatives and can stomach the higher risks that come with such strategies.

Also read: SEBI gives the go-ahead to Quant MF to launch a unique SIF