Specialised Investment Funds (SIFs) sit between mutual funds and PMS/AIFs, offering added portfolio tools at a ₹10-lakh minimum investment.
ICICI Prudential MF has launched iSIF Equity Ex-Top 100 Long-Short Fund and iSIF Hybrid Long-Short Fund; the NFOs close January 30. Here is a detailed review.
Long-short equity
A long-short approach means the fund buys stocks it finds attractive (going long) and uses limited shorts to offset risk. Shorting is essentially a way to profit if a stock falls, or to reduce the impact of market declines, so the portfolio can stay invested with potentially lower swings.
Ex-Top 100 Long-Short means the strategy focusses on stocks outside the large-cap/top-100 bucket (mid- and small-caps as per the AMFI large-cap definition).
The SIF can buy selected mid-/small-caps and also take limited ‘short’ positions using derivatives, up to 25 per cent short exposure through unhedged derivative positions in Ex-Top 100 stocks.
Mid-/small-caps can surge in upcycles but give back sharply in downcycles; the long-short structure aims to manage that volatility while staying invested.
Its benchmark will be Nifty 500 TRI; exit load is 1 per cent if redeemed within 12 months, nil thereafter. As per the AMC, the offering is subject to LTCG rate of 12.5 per cent with holding period of 12 months.
You can get the mid-/small-cap ‘long’ exposure through existing mutual fund categories, but the differentiator here is the built-in unhedged short book. A DIY alternative — pairing a mid-/small-cap fund with your own hedges, will shift the burden of execution and risks to the investor.
Investors should note that in rallies, long-short funds can lag long-only equity as hedges cap some upside. In declines, they may cushion drawdowns if hedges work, but they can still lose money if positioning is wrong. In choppy markets, outcomes depend on stock selection and hedge execution. In sharp, fast reversals, they can underperform if hedges are put on/off at the wrong time.
A long-short equity fund is best viewed as a risk-management wrapper around equity exposure, not a return shortcut. The long book seeks growth from chosen stocks; the short book is meant to cushion drawdowns, reduce froth-risk in overheated pockets, and smooth the ride. Outcomes will depend heavily on manager skill, costs, and how actively the short book is used. Investors should treat it as a satellite allocation within a diversified plan.
Long-short hybrid
ICICI Prudential’s iSIF Hybrid Long-Short Fund is built on a hybrid strategy that evaluates opportunities across equity and debt, and can use derivatives in both, with the aim of smoother outcomes and lower volatility across market phases.
In normal conditions, the strategy plans to keep about two-thirds to three-fourths in shares, and about one-fourth to one-third in debt and cash, with a small slice (up to 10 per cent) in InvIT units. It can also use derivatives extensively for hedging and portfolio management; unhedged equity exposure is permitted up to 25 per cent of net assets (intended allocation <10 per cent). Net equity exposure (excluding arbitrage-hedged positions) can range from -7.5 per cent to +75 per cent. So, it can dial equity risk down sharply when needed or keep it fairly high when opportunities look good.
On stock selection, it says it will pick individual stocks based on fundamentals, run the debt side mainly for steady interest income with occasional duration calls. It may also take opportunities in events such as IPOs, QIPs, blocks or buybacks when they look attractive.
Allocation calls will be based on various parameters, mainly based on market triggers and market dynamics. The SIF’s equity positioning is framed around the Nifty 50 price-to-book (P/B). When valuations are undervalued (P/B below 3), it keeps net equity high (65-75 per cent) and uses low derivatives (0-10 per cent). In a range-bound phase (P/B 3.0-3.7), it runs a balanced stance with net equity at 25-65 per cent and derivatives at 0-40 per cent. When valuations look overvalued (P/B above 3.7), it cuts net equity to 0-25 per cent and raises derivative allocation sharply (40-100 per cent) to manage risk. As on December 31, 2025, Nifty 50 P/B was 3.55.
The hybrid SIF carries an exit load of 1 per cent if redeemed within 12 months (nil thereafter). This is an interval strategy so redemptions/switch-outs are offered only twice a week. Per the AMC, the offering is subject to STCG at 20 per cent up to 12 months and LTCG at 12.5 per cent beyond 12 months.
You can build a broad analogue of this offering by combining a hybrid/balanced fund plus arbitrage/derivative-income and a high-quality debt fund, but the differentiator is the ability to vary net equity exposure and use derivatives overlays within one mandate.
In rising markets, it may lag pure equity (and sometimes even an equity long-short). In declines, it may hold up better than equity-heavy funds. Sideways or choppy markets can sometimes be a better environment because the debt can add carry while the equity long-short part tries to benefit from stock selection and relative opportunities. In rate-shock phases, there can be a trade-off. If yields rise quickly, debt prices can fall even as the strategy is managing equity risk; if yields fall, the debt part may support returns.
Think of it as ‘hybrid first, long-short second’. The core is an equity-plus-debt portfolio, and the long-short toolkit is mainly used to dial equity risk up or down. It suits investors who want equity plus debt in one fund and are okay with the manager using hedges and limited shorts to manage swings.
Published on January 24, 2026
