Types of SIF Strategies
The SIFs can also follow an investment strategy described as Hybrid, Equity-Oriented, or Debt-Oriented, with each corresponding to a specific framework that best suits the targeted investment objective and risk profile. The type of strategy will have an explicitly defined framework, including the allowable investment allocation, the redemption frequency, and the magnitude of the short position up to 25% that can be created through the use of derivatives.
Hybrid Strategies:
Hybrid SIFs deploy equity and debt, among other instruments, in a balanced combination to offer growth with risk management. This has opened up more diversified avenues for market exposure to investors, besides adapting to changing market conditions.
Equity-Oriented Strategies:
The equity-oriented SIFs invest mainly in equity and equity-linked instruments. They can take long and short positions and sectoral rotation to optimise return with risk management. These are suitable for investors looking for higher growth with moderate to high risk tolerance.
Debt-Oriented Strategies:
Fixed-income instruments, such as bonds and other forms of debt securities, are the focus of debt SIFs. These strategies have a capital preservation and regular income focus, with limited use of derivatives not exceeding 25% for hedging or temporary opportunities.
Notes:
• Every SIF scheme is designed to operate within the risk and disclosure framework pre-defined by SEBI.
• Short Exposure: Up to 25% unhedged derivative positions are permissible as per SEBI.
• There are various strategy types and fund structures, all of which have different liquidity and redemption
terms that allow investors to select options that more appropriately align with their goals and time horizon.
