A balanced core allocation across equity and debt with hedges and shorts to manage drawdowns — the middle ground between aggressive equity L/S and conservative debt funds.
Think of it as a balanced advantage fund with teeth — it can actively short weak stocks or indices to protect your capital during corrections.
Hybrid L/S combines equity and debt in a balanced allocation — but unlike a boring balanced fund, it can short equity positions to reduce net exposure and use duration hedges on the debt side. The result: smoother returns with lower maximum drawdowns.
In a bull market, the equity longs drive returns while shorts are kept minimal. In a bear market, shorts are increased to protect capital while debt cushions provide stability. You get equity participation with debt-like downside.
Classify current market as bull, bear, or sideways using valuation, breadth, and macro indicators to set net equity exposure.
Build long book with quality large/mid-caps. Short book uses index puts, Nifty futures, or single-stock shorts for hedging.
Allocate to high-quality bonds for accrual stability. Duration actively managed — shortened when rates expected to rise.
In bearish signals: increase shorts, raise debt allocation. In bullish signals: reduce hedges, increase equity longs.
Strict max drawdown limits trigger automatic hedge increases. Portfolio-level VaR monitored in real time.
Unlike static 60/40, this dynamically adjusts equity vs. debt and uses shorts to actively manage risk in real time.
Equity shorts and increased debt allocation during corrections significantly reduce peak-to-trough drawdowns vs. balanced funds.
Captures 60–80% of equity upside in bull markets while limiting downside to 30–50% of equity drawdowns in corrections.
Equity dividends + bond coupons provide a layer of income on top of capital appreciation and hedging alpha.
Blended equity-debt with active hedging results in portfolio volatility that's 40–50% lower than pure equity strategies.
Compliance with SEBI SIF hybrid category norms — defined equity/debt ranges, derivative limits, and NAV transparency.
BAFs use arbitrage to manage equity taxation but are essentially long-only with varying equity allocation. Hybrid L/S can genuinely short stocks and indices for alpha and protection — a fundamentally different capability that enables better risk management.
Hybrid L/S typically captures 60–80% of equity upside over full market cycles but with 40–50% lower volatility. In strong bull markets, it will underperform pure equity — but in bear markets, it will significantly outperform. Over 3–5 years, risk-adjusted returns should be superior.
Absolutely. Hybrid L/S works well as a core allocation, complemented by satellite strategies like Equity L/S or Sector Rotation for additional alpha. We help you design the overall SIF portfolio mix during the consultation.
Taxation depends on the equity/debt mix and holding period. If the fund maintains 65%+ gross equity exposure, it's taxed as equity. Otherwise, debt taxation applies. We'll clarify the specific tax treatment of the scheme you're allocated to. Consult your CA for personalised advice.
Book a free call with our SIF advisor. We'll assess your suitability and help you see how this balanced strategy fits your overall portfolio.
No obligation · SEBI-regulated products only · Suitability assessed first