Nuvama’s entry
Earlier in January 2025, Nuvama had informed exchanges about its plan to enter the mutual fund industry and submitted an application to SEBI. The company’s entry marks another addition to the growing list of wealth managers seeking to capture a share of India’s rapidly expanding mutual fund market. By sponsoring Nuvama Mutual Fund, the firm will be able to design and launch products under both traditional categories and the newly introduced SIF framework.
SIF space
Nuvama’s approval comes at a time when Specialised Investment Funds (SIFs) are becoming the talk of the market. In October, two high-profile SIFs are opening for subscription — SBI Mutual Fund’s Magnum Hybrid Long-Short Fund and Edelweiss Mutual Fund’s Altiva Hybrid Long-Short Fund. Both are hybrid SIFs designed to balance growth and risk through dynamic allocations across equity, debt, and derivatives.
Unlike conventional hybrid mutual funds, hybrid long-short SIFs must hold at least 25% in equities and 25% in fixed income instruments but enjoy the flexibility to take long and short positions across asset classes. This makes them better equipped to manage volatility while generating consistent returns.
For example, Magnum Hybrid Long-Short Fund plans to invest 65–75% in equities with hedged exposure up to 75% using derivatives, while Altiva Hybrid Long-Short Fund will allocate 25–75% each to equities and debt with additional tactical use of arbitrage and derivative strategies.
Why investors are interested in SIFs
SIFs were formally introduced by SEBI in February 2025 to bridge the gap between mutual funds and portfolio management services (PMS). Effective April 1, 2025, this framework offers investors the flexibility of PMS with the regulatory oversight of MFs. Importantly, SIFs enjoy equity taxation benefits: long-term capital gains (above 12 months) are taxed at 12.5% plus surcharge and cess, while short-term gains are taxed at 20%.
The hybrid long-short structure is designed to deliver stable returns with controlled volatility, combining arbitrage and fixed income strategies as a base and selectively using derivatives for incremental gains. These funds also offer features such as systematic investment options (SIP, SWP, STP) and structured liquidity windows — for instance, Altiva allows subscriptions and redemptions twice a week.
Who can launch SIFs?
Not all asset managers are eligible. SEBI requires that:
Established AMCs must have at least three years of operations and an average AUM of ₹10,000 crore over the past three years.
New entrants must appoint a CIO with at least 10 years of experience managing over ₹5,000 crore and a fund manager with at least three years of experience managing ₹500 crore.
Investment strategies allowed
Under the SIF framework, managers can adopt multiple strategies:
Equity long-short funds with up to 25% short exposure.
Ex-Top 100 long-short funds focusing on mid and small caps.
Sector rotation long-short funds concentrating on up to four sectors.
Debt long-short funds investing in bonds with derivative hedges.
Hybrid long-short funds with minimum 25% in both equity and debt.
To maintain discipline, SEBI allows only one strategy per category. The minimum investment threshold is Rs 10 lakh per investor, ensuring SIFs remain positioned between retail mutual funds and high-ticket PMS offerings.
Looking ahead
With Nuvama joining the fray, the SIF landscape is becoming more competitive. SBI and Edelweiss are already moving ahead with their hybrid long-short offerings, while other fund houses are expected to follow. For investors, SIFs open new avenues for portfolio diversification and tax efficiency, especially in a volatile market environment.
Nuvama’s approval marks not just its entry into asset management but also signals the growing importance of SIFs in India’s evolving investment ecosystem.
(With PTI inputs)