SBI MF's Magnum Hybrid Long Short Fund: Should you invest?

Summary: SBI Mutual Fund’s latest launch under SEBI’s SIF framework blends equity, debt and derivatives into one strategy. With its collar-based approach and equity-style taxation, the fund promises smoother returns. But is it for everyone? This piece breaks down all about the fund, who should consider it and how it fits into a portfolio.

SBI Mutual Fund will launch the Magnum Hybrid Long Short Fund, its first scheme under the new specialised investment fund (SIF) framework, on October 1, 2025. The fund offer will be open until October 15. The scheme combines equity, debt and derivatives in a way that aims to deliver steadier returns with lower volatility. The underlying benchmark will be the Nifty 50 Hybrid Composite Debt 50:50 Index TRI.

Here’s a breakdown of what the fund offers and who it’s meant for.

Magnum Hybrid Long Short Fund: Portfolio structure

Magnum Hybrid Long Short Fund will keep a sizeable portion, about 65–75 per cent, invested in equities, mainly among the top 200 companies. From these, 100 stocks will be shortlisted based on their liquidity in the derivatives market. A large part of this equity exposure (55–75 per cent) will be hedged to reduce risk, while up to 25 per cent may be kept unhedged for tactical opportunities.

On the debt side, 25–35 per cent of the portfolio will go into high-quality instruments such as government securities and AAA-rated bonds, aiming for steady income rather than betting on interest rate movements. The fund also has the option to put up to 10 per cent into REITs (real estate investment trusts) and InvITs (infrastructure investment trusts).

Collar strategy is the core engine

At the heart of the scheme is a collar strategy, which involves simultaneously buying put options to limit losses if the market falls and selling call options to generate extra income. In effect, this caps both losses and gains.

In flat markets, this method helps generate steady income while protecting against big drawdowns. The focus is less on chasing maximum upside and more on delivering a smoother investment journey with controlled risks.

It’s structured like PMS, taxed like a mutual fund

The fund has a high entry bar—minimum investment of Rs 10 lakh—since it falls under the SIF framework. However, taxation is the same as equity mutual funds. Long-term capital gains are taxed at 12.5 per cent, with an annual exemption of Rs 1.25 lakh.

This makes it particularly appealing for high-net-worth individuals (HNIs) and family offices who value the flexibility of a portfolio management service (PMS) but prefer the tax efficiency of a mutual fund.

The fund manager

The fund is managed by Gaurav Mehta, Head – SIF, Equity at SBI Mutual Fund. Mehta joined SBI in 2018 as an equity analyst, moved on to head its PMS strategies and became CIO – Alternatives (Equity) in 2021. Since July 2025, he has been leading the SIF division. His expertise in structured products and equity research makes him well-suited to run a strategy that relies heavily on derivatives.

Should you invest?

This is not a vanilla mutual fund. With its derivative-driven structure, higher minimum investment and tactical approach, it’s best suited for seasoned investors already familiar with such strategies. 

Ideally, it should make up no more than 5–10 per cent of a portfolio, positioned as a satellite allocation rather than a core holding.

Not sure which fund fits into your portfolio?

Value Research Fund Advisor can help. With curated fund recommendations based on your goals and risk profile, it helps you build a well-rounded mutual fund portfolio and decide whether a specialised fund like this deserves a spot.

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