iSIF Equity Ex-Top 100 Long-Short Fund: Points investors should assess before investing

This week, ICICI Prudential Mutual Fund launched two new investment offerings under SEBI’s recently introduced Specialised Investment Funds (SIF) framework — a category designed to sit between mutual funds and portfolio management services (PMS).

The asset manager has rolled out the iSIF Equity Ex-Top 100 Long-Short Fund and the iSIF Hybrid Long-Short Fund, with the New Fund Offer (NFO) for both opening on January 16, 2026, and closing on January 30, 2026.

The launch marks ICICI Prudential AMC’s entry into the SIF space, a new regulatory framework introduced by SEBI to address the structural gap between traditional mutual funds and PMS/AIF products. While mutual funds offer broad access but limited portfolio flexibility, and PMS/AIFs provide greater flexibility at much higher ticket sizes, SIFs are positioned as an intermediate option. They allow advanced strategies, including derivatives, at a lower minimum investment threshold of Rs 10 lakh.

Focus on Ex-Top 100 stocks

The iSIF Equity Ex-Top 100 Long-Short Fund will primarily invest in companies outside the top 100 listed stocks by market capitalisation, as defined by AMFI. This universe largely comprises mid- and small-cap stocks, which tend to be more volatile than large caps but have historically delivered sharper outperformance during market upcycles.

According to the fund’s strategy document, the scheme will take long positions in fundamentally attractive mid- and small-cap stocks while simultaneously taking short positions in overvalued stocks through derivative instruments. Unhedged short exposure will be capped at 25 per cent, in line with SEBI’s framework for SIFs.

The stated objective is to generate capital appreciation over the long term while managing volatility through a combination of stock selection, derivatives-based hedging and tactical asset allocation. The fund aims to deliver risk-adjusted returns across market cycles rather than relying solely on directional market movements.

Why long–short strategies now

Market data presented by the fund house highlights that small- and mid-cap stocks, while offering higher growth potential, tend to give back a significant portion of gains during downcycles. Volatility in these segments has remained elevated in recent years, even as their share of overall market capitalisation has steadily increased.

The long–short strategy is designed to address this challenge by allowing the fund manager to profit from both rising and falling stocks, potentially reducing drawdowns during periods of market stress. The presence of a relatively deep derivatives market for Ex-Top 100 stocks — accounting for roughly one-third of total open interest in futures and options — supports the execution of such strategies.

Structure and investment approach

The iSIF Equity Ex-Top 100 Long-Short Fund is an open-ended equity investment strategy benchmarked against the Nifty 500 TRI. Under normal circumstances, 65–100 per cent of the portfolio will be invested in Ex-Top 100 equities, with flexibility to allocate to other equities, debt and money market instruments for portfolio balancing.

The fund will follow a bottom-up stock selection approach, focusing on companies with strengthening balance sheets, earnings visibility, reasonable valuations and competitive advantages. Multiple alpha-generation techniques — including covered calls, arbitrage and selective debt exposure — may be deployed depending on market conditions.

Who the product is for

With a minimum investment requirement of Rs 10 lakh, the product is targeted at high-net-worth investors seeking exposure to mid- and small-cap opportunities with an added layer of risk management. The fund house notes that SIFs carry higher risk than traditional mutual funds and are suited for investors with a long-term horizon and higher risk tolerance.

The introduction of the iSIF Equity Ex-Top 100 Long-Short Fund reflects a broader industry push towards differentiated, strategy-led products as investors seek alternatives beyond conventional long-only equity funds in an increasingly volatile market environment.