SBI, Edelweiss make SIF debut, Quant expands with new fund

Summary: Hybrid long-short funds are emerging as the first wave of products under SEBI’s SIF framework. SBI and Edelweiss have made their debut filings, while Quant is building on its earlier equity strategies with a hybrid launch.

Hybrid long-short funds are beginning to take shape under the new Specialised Investment Fund (SIF) framework. SBI Mutual Fund, under its Magnum SIF, and Edelweiss Mutual Fund, through its Altiva SIF, have filed their debut products in this category. Quant Mutual Fund, under its qsif SIF, had earlier filed equity strategies and is now expanding its line-up with a hybrid offering.

These filings signal the next phase in SIF’s rollout. The hybrid long-short category, in particular, is designed to strike a balance between growth from equities, stability from debt and protection through derivatives. With a minimum investment size of Rs 10 lakh, these funds are targeted at seasoned investors looking for more sophisticated strategies than what conventional mutual funds usually offer.

Investment strategies

SBI Mutual Fund has proposed the Magnum Hybrid Long-Short Fund, a scheme that will put 65–75 per cent of its portfolio in equities and 25–35 per cent in debt instruments.

A large part of the strategy will focus on arbitrage opportunities and it will also explore event-driven trades like dividend or merger arbitrage and use covered calls to earn income from option premiums. Alongside, the fund will take selective long equity positions based on fundamentals and growth prospects, while keeping the flexibility to take short positions up to 25 per cent of the portfolio when stocks or sectors look weak.

Debt and money market instruments will provide stability and liquidity. Derivatives will be used not just for income and shorting but also to hedge the entire equity book, making risk management a core part of the fund’s design. The fund will be benchmarked against the Nifty 50 Hybrid Composite Debt 50:50 Index TRI.

Edelweiss Mutual Fund, through its Altiva platform, has filed the Altiva Hybrid Long-Short Fund, which takes a more debt-oriented approach. The scheme will invest 25–75 per cent in equities and 25–75 per cent in debt, but its benchmark, the Nifty 50 Hybrid Composite Debt 15:85 Index, reflects a stronger lean toward fixed income. In addition to traditional equity and debt, the fund may use arbitrage, special situations and limited short derivative positions (up to 25 per cent) to deliver returns. This structure is aimed at investors seeking steadier income with only moderate equity exposure.

The qsif Hybrid Long-Short Fund aims to strike a balance between growth, income and risk management. The scheme will follow a flexible allocation model, investing 25–75 per cent in equities, 25–75 per cent in debt, with the option to take short derivative positions of up to 25 per cent in equity or debt. It can also invest up to 20 per cent in REITs and InvITs, and use derivatives to hedge up to 100 per cent of its portfolio when needed.

The fund’s approach is dynamic, with allocations shifting depending on market conditions and the economic outlook. The fund will be benchmarked against the Nifty 50 Hybrid Composite Debt 50:50 Index TRI.

Also read: How qsif brings hedge fund DNA to Indians