SIF Simplified
Demystifying framework architecture down to core operational layers. Explore the modules below to unpack granular documentation, metrics, and workflows instantly.
TOPIC-1: Long-Short Strategy
A Long-Short strategy tries to benefit by investing in stronger opportunities while positioning against weaker ones.
Topic 2: Naked Short Selling
Naked short selling refers to uncovered selling without proper borrowing arrangements.
Topic 3: Hedging
Hedging is a strategy used to reduce potential losses during uncertain market conditions.
Topic 4: Volatility
Volatility is the degree of ups and downs in market or investment prices over time.
Equity Long-Short Fund
An open-ended SIF strategy that invests at least 80% in equity and equity-related instruments with limited short exposure through derivatives, as permitted by SEBI.
Equity Ex-Top 100 Long-Short Fund
A SEBI-regulated equity SIF strategy that invests at least 65% in stocks outside the top 100 by market capitalisation, with limited short exposure through derivatives.
Sector Rotation Long-Short Fund
A SEBI-regulated equity SIF strategy that concentrates at least 80% in equity across a maximum of four sectors, with limited sector-level short exposure through derivatives.
Active Asset Allocator Long-Short Fund
A SEBI-regulated hybrid SIF strategy with no fixed allocation floor across asset classes, allowing dynamic portfolio shifts across equity, debt, derivatives, REITs, InvITs and commodity derivatives.
Hybrid Long-Short Fund
A SEBI-regulated SIF strategy that maintains a balanced portfolio with minimum 25% in equity and minimum 25% in debt, along with limited short exposure through derivatives for risk management and return enhancement.
Short Selling
Short selling is a trading strategy where an investor sells securities they do not own, expecting prices to decline, so they can buy them back later at a lower price. It is a SEBI-regulated mechanism used for hedging, arbitrage, and directional strategies.
Unhedged Short Exposure
Unhedged short exposure refers to short positions taken through derivatives for directional bets rather than to offset long positions. Under SEBI's SIF framework, fund managers can take up to 25% unhedged short exposure of net assets to generate returns from declining markets.
Gross Exposure vs Net Exposure
Gross exposure and net exposure are two different ways to measure a portfolio's total market risk. Under SEBI's SIF framework, the total gross exposure is capped at 100% of net assets, while net exposure reflects the actual directional market risk after offsetting long and short positions.
Pair Trading
Pair trading is a market-neutral statistical arbitrage strategy where investors simultaneously take a long position in one security and a short position in a related security, profiting from the convergence of their relative prices regardless of overall market direction.
Volatility & Drawdown
Volatility measures how much and how quickly an investment's returns fluctuate over time, while drawdown measures the decline from a portfolio's peak value to its lowest point before recovery. Both are critical risk metrics used to evaluate investment strategies.
Derivative Risk Management
Derivative risk management involves identifying, measuring, and controlling risks associated with derivative positions through margin requirements, position limits, hedging strategies, and monitoring of risk parameters (Greeks) to ensure portfolio safety and regulatory compliance.
REIT & InvIT Exposure
REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are SEBI-regulated investment vehicles that allow investors to participate in real estate and infrastructure assets. SIF strategies can invest in these instruments as part of their portfolio allocation.
Statistical Arbitrage
Statistical arbitrage is a quantitative trading strategy that identifies temporary price divergences between related securities and profits when prices revert to their statistical relationship. It uses mathematical models and statistical techniques like cointegration and mean reversion.
Concentration Risk
Concentration risk arises when a portfolio holds too large a position in a single stock, issuer, or sector. SEBI prescribes diversification limits for mutual funds and SIF strategies to control this risk and protect investor capital.
Stress Testing
Stress testing is a risk management technique that evaluates how a portfolio performs under extreme but plausible adverse scenarios — such as market crashes, liquidity crises, or rate shocks. SEBI mandates stress testing for open-ended debt mutual fund schemes from December 2020.
Risk-Adjusted Return Analysis
Risk-adjusted return analysis evaluates investment performance by factoring in the risk taken to generate returns. Key metrics include the Sharpe ratio, Sortino ratio, and Treynor ratio — all widely used by fund managers and investors to compare SIF strategies on a level playing field.
SIF Taxation
SIFs are governed under the SEBI (Mutual Funds) Regulations, 1996. As a result, they follow the same pass-through tax structure applicable to mutual fund units under Section 10(23D) of the Income-tax Act, 1961. The fund itself is exempt from tax. Investors are taxed only upon redemption, at rates determined by the fund's equity allocation and holding period.
SIF Minimum Investment
SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 dated February 27, 2025 mandates that every investor must maintain a minimum aggregate investment of ₹10 lakh across all investment strategies of a SIF at the PAN level. Accredited investors are exempt. The rule is effective from April 1, 2025.
SIF Eligibility
SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 (February 27, 2025) prescribes eligibility for both investors and AMCs. Investors need ₹10 lakh minimum at PAN level and valid KYC. AMCs must meet one of two SEBI-prescribed routes based on track record or dedicated investment professionals.
SIF Risks
SEBI mandates that every SIF strategy disclose all material risk factors in its Investment Strategy Information Document (ISID). SIF strategies involve higher risks than conventional mutual funds due to the use of derivatives, short positions, leverage, and concentrated mandates — all explicitly addressed in the SEBI SIF framework.