ICICI Prudential MF enters SIF space with equity ex-top 100, hybrid long-short funds

ICICI Prudential Mutual Fund has filed draft papers with the Securities and Exchange Board of India (SEBI) to roll out its Specialised Investment Fund (SIF) platform under the iSIF brand, marking its formal entry into a newly created segment of regulated investment products aimed at affluent and sophisticated investors.

As part of the filing, the asset manager has sought approval to launch the iSIF Equity Ex-Top 100 Long-Short Fund, an open-ended strategy focused primarily on mid-cap and small-cap stocks, while retaining the flexibility to take limited short positions through derivatives. The fund’s objective is to deliver long-term capital appreciation by investing in equity and equity-related instruments of companies ranked outside the top 100 by market capitalisation.

Under the proposed asset allocation, at least 65% of the portfolio will be invested in mid-cap and small-cap stocks, with the remaining portion allowed to be allocated to large-cap equities. The use of derivatives will be selective and aimed primarily at managing downside risks or expressing tactical bearish views when market conditions warrant.

Hybrid Long-Short Fund

In addition to the equity-focused strategy, ICICI Prudential Mutual Fund has also filed documents to introduce a Hybrid Long-Short Fund under the iSIF platform. This strategy will combine equity and debt exposure and permit limited short positions in both asset classes. Hybrid long-short strategies are designed to dynamically adjust asset allocation in response to changing market conditions, offering investors a more flexible risk-return profile.

According to the draft, the hybrid fund will invest between 65% and 75% in equity instruments, while 25% to 35% will be allocated to debt securities. The fund will also be allowed to take short exposure of up to 25% of net assets through unhedged derivative positions in equity and debt. Given the presence of unhedged derivative exposure, net equity and debt allocations may vary over time depending on market movements and investment calls.

SIF framework

Specialised Investment Funds are positioned as a bridge between traditional mutual funds and alternative investment funds (AIFs). They carry a higher minimum investment threshold of ₹10 lakh at the PAN level and offer fund managers greater flexibility in portfolio construction, including the use of advanced long-short strategies.

ICICI Prudential MF’s proposed iSIF platform will operate within its existing mutual fund structure registered under the SEBI (Mutual Funds) Regulations, 1996. The iSIF strategies will be managed by the same fund management teams that oversee its mutual fund offerings.

At present, SEBI has permitted seven investment strategies across equity, debt and hybrid asset classes under the SIF framework.

Bandhan Asset Management Company (AMC) has also filed a draft Information Statement of Investment Details (ISID) for its first Specialised Investment Fund. The proposed Arudha Hybrid Long-Short Fund will follow an interval structure and combine equity and debt investments with limited use of derivatives. It will allocate 35–65% each to equities and debt, allow short exposure of up to 25% through unhedged derivatives, fall under Risk Band Level 2, and be benchmarked against the CRISIL Hybrid 85+15 Conservative Index. The fund will be offered at an NFO price of Rs 10 per unit, with a minimum investment of Rs 10 lakh.