Quant Mutual Fund unveils new Long-Short SIF scheme targeting mid-cap and small-cap stocks

Quant Mutual Fund has announced the launch of its Equity Ex-Top 100 Long-Short Fund – Specialised Investment Fund (SIF), a first-of-its-kind offering that seeks to combine the growth potential of mid- and small-cap stocks with the flexibility of derivative-based risk management. The New Fund Offer (NFO) opened recently and will remain available for subscription until November 7, 2025, after which it will reopen for continuous sale and repurchase within five business days of allotment.

The new fund is designed to give investors exposure to companies outside the top 100 by market capitalisation, a segment known for its higher growth prospects but also elevated volatility. The scheme will be benchmarked against the NIFTY 500 Total Return Index (TRI) and managed by an experienced team comprising Sandeep Tandon, Lokesh Garg, Ankit Pande, Sameer Kate, and Sanjeev Sharma.

According to the fund’s structure, up to 35% of net assets may be invested in top 100 companies to maintain stability, while the remaining allocation will focus on mid- and small-cap opportunities. The fund will hold 65%–100% of its portfolio in equities, with up to 25% exposure in unhedged short derivative positions such as futures and options to balance risk. Another 35% may be parked in cash or money market instruments to ensure liquidity and tactical flexibility.

Quant’s investment philosophy emphasizes active allocation and derivative overlays to navigate volatile markets while optimising returns. The fund can also invest up to 20% in REITs and InvITs, providing additional diversification. Investors can subscribe or redeem units daily, with an exit load of 1% applicable on redemptions within 15 days of allotment. The minimum investment amount is ₹10 lakh, while systematic investment plans (SIPs) start at Rs 10,000 with a minimum of six instalments.

The fund’s objective is long-term capital appreciation through a mix of long equity positions and selective short strategies, offering investors exposure beyond large-cap benchmarks. Quant Mutual Fund founder and CIO Sandeep Tandon believes this product bridges the gap between traditional mutual funds and long-short Alternative Investment Funds (AIFs).

Speaking at the Moneycontrol Mutual Fund Summit in Bengaluru on October 27, Tandon said the SIF structure addresses key limitations that hampered long-short strategies under the AIF Category III format. “Earlier, fund managers came from long-only backgrounds. Managing long-short funds requires a different mindset, which was missing,” he explained.

He identified three major challenges faced by AIF long-short funds: lack of managerial expertise, unfavourable taxation, and high fees. AIF Category III funds are taxed at the fund level, often at the highest marginal rate, while SIFs enjoy the same tax treatment as mutual funds, passing through income to investors without double taxation.

Additionally, the cost differential is significant. “In the AIF world, investors pay 2–2.5% upfront management fees, which erodes returns. In contrast, mutual funds operate at around 50 basis points, with daily NAVs, transparent disclosures, and tighter cost caps,” Tandon said.

The mutual fund format, he added, ensures tax efficiency, cost competitiveness, and operational transparency—key elements that could make SIFs a more sustainable and attractive option for investors seeking sophisticated long-short exposure.

Quant Mutual Fund plans to expand its SIF suite to five funds by December 2025, marking a strategic push toward hybrid investment products that balance growth and risk. With the Equity Ex-Top 100 Long-Short Fund SIF, Quant aims to deliver superior post-tax returns while offering investors access to India’s fast-evolving mid- and small-cap ecosystem under a regulated, low-cost mutual fund framework.