Edelweiss Altiva SIF Hybrid Long-Short Fund closes today: Should you invest in India’s newest hybrid strategy?

Edelweiss Mutual Fund’s Altiva Hybrid Long-Short Fund, one of the first Specialised Investment Funds (SIFs) to be launched in India, closes for subscription today (Octobe 15). The interval fund, open since October 1, combines equity, debt, arbitrage, and derivative strategies, offering investors an alternative to traditional hybrid funds. It allows limited short exposure through derivatives, aiming to deliver superior risk-adjusted returns across market cycles.

SIFs are a new SEBI-approved fund category designed for affluent investors seeking complex strategies within a regulated framework. Positioned between mutual funds and portfolio management services (PMS), they allow flexibility to deploy advanced tools like derivatives, long-short positions, and arbitrage across asset classes.

The concept is still in its infancy — Quant Mutual Fund launched the first SIF in September 2025, followed by Edelweiss and SBI Mutual Fund rolling out hybrid long-short versions earlier this month.

What are SIFs and how do they work?

Specialised Investment Funds (SIFs) aim to provide investors with access to sophisticated, institutional-grade strategies. Unlike regular mutual funds, which are limited by exposure caps and hedging rules, SIFs can take naked short positions (up to 25% of assets) — selling securities not currently owned — to profit from falling prices.

SIFs require a minimum investment of ₹10 lakh (₹1 lakh for accredited investors), bridging the gap between low-cost mutual funds and high-entry PMS or AIF products that need ₹50 lakh to ₹1 crore.

Edelweiss Altiva Hybrid Long-Short Fund 

The Altiva Hybrid Long-Short Fund aims to deliver returns by blending equity opportunities with income from arbitrage, derivatives, special situations, and fixed-income instruments. It is benchmarked against the NIFTY 50 Hybrid Composite Debt 50:50 Index and categorized as a Hybrid Long-Short Fund. Managed by Bharat Lahoti and Bhavesh Jain (equity), Dhawal Dalal and Pranavi Kulkarni (debt), and Amit Vora (overseas), the fund allows daily subscriptions and redemptions twice a week. Investors can choose between Direct and Regular Plans with Growth or IDCW options. Minimum investment is ₹10 lakh, with a 0.5% exit load within 180 days.

Structure and Strategy

Edelweiss’s Altiva Fund is structured to balance risk through a diversified portfolio mix:

Debt: Around 50% allocation, largely in AAA sovereign and AA-rated corporate bonds

Arbitrage: 20–40% to generate stable spreads

Unhedged equity: Up to 10% in special opportunities like IPOs, buybacks, and mergers

Derivatives/long-short: 10–15% for risk management and return enhancement

The fund’s expense ratio is capped at 2.35% (regular plan), similar to hybrid mutual funds. Subscriptions are open daily, while redemptions are allowed twice a week — on Mondays and Wednesdays.

Use of derivatives and long-short strategies

The fund actively employs three primary long-short strategies, with covered calls as the cornerstone. Covered calls involve holding equities while selling call options to earn a premium. This enhances yield but caps upside if the stock rallies sharply.

In volatile or directionless markets, the fund may use straddles and strangles — strategies that involve buying both calls and puts on the same or different strike prices to capture large price movements. For downside protection, it can use protective puts, which limit losses during sharp market corrections.

While these tools can boost returns and reduce volatility, they also carry execution and timing risks. Misjudging market direction or volatility trends could lead to short-term underperformance.

Taxation rules

With about half its assets in arbitrage, equity, and derivatives, the fund qualifies as a “non-equity, non-debt” product for taxation. Long-term capital gains after two years are taxed at 12.5%, lower than conventional debt or conservative hybrid funds.

Edelweiss expects AHLSF to deliver 1–2% higher returns than traditional arbitrage funds, driven by its tactical positioning and derivative exposure. For comparison, peer product SBI Magna SIF Hybrid Long-Short maintains 65–75% equity exposure and 25–35% debt.

Should investors invest?

SIFs represent an exciting evolution in India’s investment landscape, bringing hedge-fund-like flexibility to regulated mutual fund structures. They can potentially deliver steady gains across market conditions, including sideways or falling markets — something standard mutual funds struggle with.

However, experts urge caution. Indian asset managers have limited track record in long-short strategies, which require precise market calls and disciplined risk control. Even small derivative missteps could affect performance.

Financial planners suggest that only seasoned investors with at least a Rs 10 lakh allocation and a medium-risk appetite should explore SIFs. For most retail investors, diversified mutual funds or balanced advantage funds remain simpler, proven routes for wealth creation.