SIF portfolio explained: Real examples of how Specialised Investment Funds are structured

On October 1, Magnum Hybrid Long Short Fund (SBI Mutual Fund) and the Altiva Hybrid Long-Short Fund (Edelweiss Mutual Fund) opened for subscription

An SIF portfolio, which includes cash holdings, derivative exposures, and equity investments, provides a clear picture of the allocation of the fund's capital.

The portfolio must also differentiate between derivative positions held for speculative goals and those taken for hedging or portfolio rebalancing, in contrast to a typical investment portfolio. Because unhedged short exposures through derivatives are restricted to 25% of the overall portfolio value under SIF rules, this distinction is essential.

1. Investment in equity is ₹70 crore

This is a direct investment in shares of companies. It represents long positions, meaning the fund is expecting stock prices to go up.

2. Cash Holding is ₹5 core

This is uninvested cash kept for liquidity.

3. Short exposure using futures is ₹25 crore

The fund has sold stock or index futures, meaning it’s taking a short position, a bet that the market or specific stocks will fall.

Here is the key point, this short exposure is likely being used for hedging the equity risk (not for speculation).

In SIF, short positions using futures are allowed without penalty if they are used to hedge the equity exposure or for portfolio rebalancing.

So, the ₹25 crore short futures position is considered offsetting the long equity position.

Example 2

1. ₹62.5 crore in equity

. This is the fund’s direct investment in stocks, expecting prices to go up.

2. ₹10 crore in long futures & options

. This represents additional bullish bets using derivatives like:

• Buying equity futures (expecting prices to rise)

• Buying call options (right to buy later if prices go up)

These are not for hedging, but rather additional exposure to equity markets.

3. ₹2.5 crore in cash

Some liquidity for flexibility or risk management

4. ₹25 crore in short futures

This is a bet against the market i.e., selling stock or index futures, expecting prices to fall.

But here’s the important part, this short exposure is not being used to hedge the equity positions. It is considered “unhedged short exposure”, which is risky and limited under SIF rules.

In example 1, short futures were used to hedge the equity investment, so they were considered risk-reducing.

In example 2, the fund already has long equity (₹62.5 crore), extra long positions in derivatives (₹10 crore). And still takes a ₹25 crore short position using futures, which is not offsetting, but an aggressive strategy.

Ahead of its debut, Edelweiss MF CEO Radhika Gupta in a social media post on X shared key insights to help investors understand how SIFs differ from traditional mutual funds

"For instance our launch is a tax efficient income solution. If you have debt or income as part of your asset allocation it fits. But if you have only growth assets it doesn't at all. My view is that the best part of SIF is the tax efficiency, structure and transparency of MF with a little more alternative like flexibility," Gupta posted on September 30.

Altiva Hybrid Long-Short Fund aims to generate capital appreciation through equity investments and income via arbitrage, derivatives, special situations, and fixed income instruments. It follows a hybrid long-short strategy and is benchmarked against the NIFTY 50 Hybrid Composite Debt 50:50 Index.