This is a SEBI-regulated investment strategy category under the Specialized Investment Fund (SIF) framework, introduced vide SEBI circular dated February 27, 2025.
What is an Equity Ex-Top 100 Long-Short Fund?
The Equity Ex-Top 100 Long-Short Fund is one of the three equity-oriented SIF strategy categories defined under SEBI's SIF framework. The defining feature of this category is that at least 65% of the portfolio must be invested in equity and equity-related instruments of companies that fall outside the top 100 stocks by market capitalisation.
In India, the top 100 companies by market capitalisation are generally referred to as large cap stocks. This strategy is therefore focused primarily on mid cap and small cap stocks.
What Does "Ex-Top 100" Mean?
It means the strategy invests in companies ranked 101st and below by market capitalisation. These are mid cap and small cap companies as classified under SEBI's market capitalisation definitions.
Understanding the Market Cap Landscape
SEBI classifies listed companies by market capitalisation as follows (as per SEBI circular on categorisation of mutual fund schemes):
How Does the Long and Short Book Work in This Strategy?
The fund takes long positions (purchases) primarily in mid cap and small cap stocks — companies ranked 101st and below by market capitalisation. At least 65% of net assets must be in equity and equity-related instruments of such companies.
The fund uses derivative instruments to take short positions. As per SEBI's framework, this permitted short exposure is also directed outside large cap stocks (i.e., the same ex-top 100 universe). Maximum unhedged short exposure is 25% of net assets.
Key SEBI Regulatory Parameters
The following parameters are defined in SEBI's SIF framework. Individual strategy documents (ISIDs) may specify tighter limits.
At least 65% of net assets must be invested in equity and equity-related instruments of companies outside the top 100 by market capitalisation.
Short exposure via derivatives for purposes other than hedging and portfolio rebalancing is capped at 25% of net assets, directed outside large cap stocks.
The strategy is designed to provide exposure to companies ranked 101st and below by market capitalisation — the mid cap and small cap universe.
The combined gross exposure of all positions is capped at 100% of net assets as per SEBI's SIF regulations.
How Is This Different From the Equity Long-Short Fund?
Equity Long-Short Fund
- •No market cap restriction
- •Can invest across large, mid and small cap
- •Minimum equity: 80% of net assets
Equity Ex-Top 100 Long-Short Fund
- •Focused on mid cap and small cap stocks (ex-top 100)
- •Large cap stocks are not part of the primary mandate
- •Minimum equity: 65% of net assets (in ex-top 100 stocks)
Important Note on Risk
Mid cap and small cap stocks are generally considered to carry higher volatility and liquidity risk compared to large cap stocks. The use of short positions through derivatives adds further complexity. Investors should carefully read the Investment Strategy Information Document (ISID) of the specific strategy before investing.
Category: Equity-oriented SIF strategy
SEBI Framework: Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 dated February 27, 2025
Minimum Equity: 65% of net assets in stocks outside top 100 by market cap
Short Exposure Limit: Up to 25% of net assets (unhedged, via derivatives, ex-top 100)
Market Cap Focus: Mid cap and small cap (companies ranked 101st and below)
Structure: Open-ended or interval
Minimum Investment: ₹10 lakh per investor across all SIF strategies of the AMC