Altiva Equity Long-Short Fund Launches: Capitalizing on Market volatility with up to 25% Derivatives Exposure

Altiva Equity Long-Short Fund Launches: Capitalizing on Market volatility with up to 25% Derivatives Exposure​

Edelweiss Mutual Fund has introduced a sophisticated new offering, the Altiva Equity Long-Short Fund. This Specialized Investment Fund (SIF) is designed for investors seeking capital appreciation in the long term by engaging actively with both equity markets and complex derivative instruments. The fund's strategy incorporates limited short exposure, positioning it as a high-conviction play in an evolving market environment.

The launch of this Altiva SIF signifies Edelweiss Asset Management Limited’s expanded foray into sophisticated investment strategies. The fund is categorized as Level 3 risk and targets the Nifty 100 Total Return Index (TRI) for performance comparison. It represents a fresh product from Altiva SIF and does not carry any previous performance track record, necessitating careful review of its underlying mechanisms.

Decoding the Long-Short Strategy and Asset Allocation​

The Altiva Equity Long-Short Fund is structured as an open-ended equity strategy that invests predominantly in listed equity and equity-related instruments. The fund's primary objective remains generating long-term capital appreciation. This strategy allows for active management, utilizing both top-down sector identification and bottom-up stock selection to build a portfolio.

A key component of the fund’s unique approach is its strategic use of derivatives. The investment strategy has the capacity for up to 25% unhedged short exposure in equity through derivative instruments. This limited but significant exposure allows the fund to profit from market declines while simultaneously investing in growth areas, providing a mechanism to mitigate risk during turbulent times.

In terms of asset distribution, the Indicative Allocation places Equity and Equity related instruments between 80% and 100% of total assets. Debt and Money Market Instruments (MMI) and InvIT units are allocated between 0% and 20%, ensuring a balance between risk-on equity exposure and defensive stability.

Risk Management and Derivatives Exposure Limits​

The fund’s design places robust focus on comprehensive risk management. The Investment Strategy has instituted a detailed process to identify, measure, and monitor portfolio risk across all invested assets. This is critical given the leveraged nature of derivatives used in the fund's structure.

Derivatives exposure can run up to 100% of net assets, with significant limits placed on different types of instruments. The fund may engage in various derivative strategies, such as Covered Calls and Portfolio Hedging using Index Futures/Options. A particular focus is placed on limiting unhedged short positions at the asset level, which are capped at 25%.

The portfolio risk includes risks associated with equity market volatility, interest rate fluctuation for debt instruments, and credit exposure to issuers. Mitigation strategies involve diversification across sectors and companies and maintaining an optimum mix of cash and liquid assets within the portfolio structure.

Investment Mechanics and Fee Structure​

The Altiva Equity Long-Short Fund is overseen by expert management, including Mr. Bharat Lahoti, who has 19 years of experience in portfolio management, and Mr. Bhavesh Jain, who specializes in equity derivatives. The fund provides various investment options, including Regular Plan, Systematic Investment Plan (SIP), and Systematic Transfer Plan (STP).

The cost structure is detailed to ensure transparency for investors. While the total expense ratio (TER) is subject to a Base Expense Ratio (BER) up to 2.10%, the AMC has committed that no New Fund Offer Expenses will be charged, bearing them internally. Furthermore, a specific Exit Load is applicable: if units are redeemed or switched out within 90 days from the date of allotment, an exit load of 0.50% of the applicable NAV applies, and nil thereafter.

Regulatory and Transactional Insights​

The SIF is compliant with SEBI (Mutual Funds) Regulations 2026. The fund's operational mechanics are defined by daily subscription and redemption frequencies. All unit holders will be provided with a Consolidated Account Statement (CAS) on a monthly or half-yearly basis, detailing the performance of the investment strategy.

The AMC has confirmed that all disclosures made in this Investment Strategy Information Document are true, fair, and adequate to allow investors to make an informed decision. The fund also provides clear guidance on investor eligibility, ensuring compliance with strict regulations regarding non-resident Indian (NRI) and Foreign Institutional Investor (FII) investments.