SIF rollout narrows to equity and hybrid plays, complex strategies stay off the table

Subscribe to enjoy similar stories. Nearly a year after the Securities and Exchange Board of India (Sebi) introduced Specialized Investment Funds (SIFs), the market has stuck to the equity long-short space and stayed far from debt plans. Since the product’s launch in April last year, every SIF that has come to market has fallen into just three of the seven strategies permitted by the regulator—equity long-short, equity ex-top 100 long-short and hybrid long-short.

No fund house has launched either of the two debt strategies or a sector rotation equity fund, or an active asset allocator fund under the hybrid category. Among the launched products are SBI Mutual Fund’s Magnum Hybrid Long Short, Tata Mutual Fund’s Titanium Hybrid Long Short SIF. ITI Mutual Fund has entered the space with Diviniti Equity Long Short fund.

Across these launches, fund houses have largely steered clear of strategies dependent on heavy debt exposure or concentrated sectoral bets. Ten SIFs have been launched in the country with a pipeline of nine more products. The only exceptions so far are from Quant Mutual Fund, which has announced plans for a sector rotation long-short fund and an active asset allocation long-short fund, but neither has been launched yet.

Equity long-short funds invest mainly in equities, with limited short positions. Hybrid long-short funds balance equity and debt while allowing some short exposure. Equity ex–top 100 long-short funds focus on mid- and small-cap stocks, avoiding large caps, and use derivatives to take controlled short positions for risk management.