40.99% in fixed income: How Altiva Hybrid Long-Short Fund is positioning for volatile markets

The Altiva Hybrid Long-Short Fund has maintained a sizeable allocation to fixed income as it seeks to navigate volatile market conditions, with debt instruments accounting for 40.99% of the portfolio as of September 30, 2026. The strategy also has a preference for shorter-duration fixed-income exposure, potentially giving the portfolio greater flexibility as market conditions change.

The fund’s portfolio is built around an income-oriented strategy, with fixed income and cash-future arbitrage/covered calls forming its core strategies. Fixed income accounted for 41% in the portfolio construction summary, while cash-future arbitrage and covered calls represented 38%. Other derivative strategies accounted for 12%, special situations 2% and REITs/InvITs 5%.

Shorter duration remains a focus

The fund’s debt portfolio had a yield to maturity (YTM) of 8.17% as of September 30, while modified duration stood at 1.35 years. Its average maturity was 1.53 years and Macaulay duration was 1.46 years.

The fund said its fixed-income exposure remained anchored in high-quality instruments, while duration declined further during September, reflecting its continued preference for a shorter-duration profile.

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A shorter-duration portfolio generally has lower sensitivity to changes in bond yields than a longer-duration portfolio. In the fund's case, the positioning also reflects an emphasis on maintaining liquidity and flexibility for tactical deployment.

Surplus cash was actively managed through Treasury Bills and TREPS, according to the portfolio commentary. This allowed the fund to retain liquidity while looking for opportunities across asset classes.

T-Bills form the largest fixed-income exposure

Within the fixed-income portfolio, T-Bills accounted for 13.66%, making them the largest disclosed allocation. This was followed by Bajaj Finance at 4.07%, NABARD at 3.25%, SIDBI at 3.13% and REC at 2.45%.

The portfolio also had exposures to other highly rated issuers, including Mahindra & Mahindra Financial Services, Tata Capital Housing Finance and Tata Capital.

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Positioning amid market volatility

The fund's defensive positioning came as equity markets experienced a sharp correction in September. The Nifty 50 declined 6.06% during the month, while the Altiva Hybrid Long-Short Fund's Direct plan fell 0.72%.

The fund said its portfolio continues to emphasise carry-oriented, market-neutral and opportunistic strategies, while retaining sufficient liquidity to respond to emerging opportunities.

The strategy’s broader positioning combines fixed income with arbitrage, covered calls, derivatives and special situations. This diversification is intended to reduce reliance on the direction of equity markets while generating income and seeking opportunities across different market conditions.

For investors assessing the strategy, the combination of a substantial fixed-income allocation, shorter duration and high-quality debt exposure remains a key feature of how the fund is positioned to navigate changing market conditions.

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