Two Investment Funds Available for Subscription: Should You Invest?
On October 1, two new Specialised Investment Funds (SIFs), the Magnum Hybrid Long Short Fund and the Altiva Hybrid Long-Short Fund, opened for people to invest. SBI Mutual Fund is introducing a hybrid Structured Investment Fund (SIF) under its well-known Magnum brand, while Edelweiss Mutual Fund is introducing its own hybrid SIF under the Altiva label.
Both funds aim to offer a mix of debt and equity exposure. Many of you might be wondering, how do hybrid-oriented SIFs differ from conventional hybrid mutual funds?
Hybrid long-short funds are built to give steady returns with limited volatility. Their main approach combines arbitrage and fixed-income investments to create a stable foundation, while carefully using derivatives and special situations to boost overall returns.
Experts say that the hybrid long-short SIFs are similar to traditional hybrid mutual funds in that they must invest at least 25% each in equity and fixed income. SIFs can also take both long and short positions in different sectors. This means they can perform more smoothly during market ups and downs.
The Fund managers can actively handle the market, as the SIFs have a flexible structure. By maintaining low net equity exposure and using alternative strategies, they aim to achieve a better balance between risk and reward.
Along with the SBI Mutual Fund and Edelweiss Mutual Fund launching their new Investment funds, the Quant Mutual Fund has launched the QSIF Hybrid Long-Short Fund, which is currently open for subscription and will close on October 9. Additionally, Tata Mutual Fund also has a draft document with SEBI for the launch of its own Titanium Hybrid Long-Short Fund.
Magnum Hybrid Long Short Fund
As per experts, the Magnum Hybrid Long Short Fund aims at offering stable earnings while maintaining an appropriate level of volatility. The fund is suitable for investors who want to have a balance between short-term risk management and long-term wealth creation.
The fund will invest around 65% to 75% of its assets in equity and equity-related instruments. The hedged portion will be between 0% and 75%. This includes index futures, stock futures, index options, stock options, and other derivative strategies.
The unhedged portion of the fund, which includes short derivatives, will be between 0% and 25%. Additionally, the strategy plans to invest 25% to 35% in debt and money market instruments, including units of debt-based mutual fund schemes. It may also invest up to 10% in units issued by REITs and InvITs, staying within SEBI’s prescribed limits.
Altiva Hybrid Long-Short Fund
The Altiva Hybrid Long-Short Fund targets creating incremental returns by investing a part of the portfolio in derivative strategies and around 20% to 40% of the portfolio in relatively low-risk strategies.
It will allocate 25% to 75% of its portfolio to equity and equity-related instruments and a similar 25% to 75% range to debt and money market instruments. The fund also has the option to invest up to 20% in units issued by REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts), within the limits set by SEBI.
As per experts, the fund is suitable for investors with a medium-term investment horizon of 18 months to 36 months.
