It is still early days, and there is a long way to go before this category comes anywhere close to Hybrid Long-Short in size.
As of September 2026, Hybrid Long-Short funds had around ₹23,900 crore across 11 schemes. Active Asset Allocator Long-Short (AAA), by comparison, had about ₹2,436 crore across three live funds.
The difference in size is substantial. What is changing, however, is AAA’s share of the hybrid SIF segment. It was around 2% in April and had risen to about 10% by September. Two more fund houses launched AAA Long Short funds in October.
This is not enough to say that the category is catching up. It does suggest that more fund houses are exploring the strategy and investors are beginning to take notice.
The difference
What makes Active Asset Allocator appealing to a segment of SIF investors?
Both Hybrid Long-Short and Active Asset Allocator funds can invest in equity and debt. Both can use derivatives actively, including taking short positions, subject to the applicable limits.
The important difference between the two strategies is the minimum allocation.
Hybrid Long-Short
25% + 25%
Must maintain at least 25% in equity and at least 25% in debt.
Active Asset Allocator
No minimums
Subject to its scheme documents and permitted investments, the manager can reduce equity or debt exposure significantly, even to zero, and allocate across other permitted assets including REITs, InvITs and commodity derivatives.
The manager has greater flexibility to decide where the money should be invested. That flexibility is the main feature of the category.
In practice
Where the flexibility matters
Commodities are part of the investment universe
This is one of the more distinctive features of AAA.
Gold and silver are familiar to Indian investors, but direct exposure to commodities such as copper and crude oil is less common. Trading commodity futures independently also involves margins, expiry dates and contract rollovers.
AAA funds can take commodity exposure through their permitted investment structures. The live funds have already used gold, silver, copper, crude oil, natural gas and agricultural commodities.
Commodity prices can be influenced by supply disruptions, inflation, currency movements and global demand. This gives a fund manager another set of variables to work with, although it does not automatically reduce portfolio risk.
The manager can take different kinds of positions
A commodity allocation does not necessarily mean buying an asset because the manager expects its price to rise. An AAA fund can also use derivatives to position for a fall in prices or to capture price differences between related instruments, subject to its mandate.
For example, iSIF briefly had a slightly negative overall commodity position in August when its silver exposure turned negative. DynaSIF has also held physical gold and silver while selling a similar amount through futures, seeking to earn the difference between the two prices rather than depending entirely on the direction of the market.
Different strategies, same underlying asset. The category allows a wider range of approaches.
Income can come from different sources
An AAA portfolio need not depend only on equity gains or bond interest. Depending on the strategy, income may come from interest on bonds, distributions from REITs and InvITs, and premiums received from selling options.
DynaSIF had around 36% in REITs and InvITs in September, alongside corporate bonds yielding about 8.4%. iSIF held more than half its portfolio in government and high-quality bonds and also used call-writing strategies on stocks it owned.
These portfolios look quite different, even though they belong to the same category.
Equity exposure can be reduced substantially
The absence of a minimum equity allocation gives the manager room to reduce the portfolio’s sensitivity to the stock market when the strategy calls for it.
At the end of September, qSIF’s reported beta was 0.07, with average net equity exposure of about 27%. A Hybrid Long-Short fund can hedge its equity exposure too, but it must continue to maintain at least 25% in equity.
The gap
The commodity opportunity is not being fully used yet
The AAA benchmarks include commodity allocations ranging from 10% to 30%, averaging around 18% across the five funds referred to in the September comparison. Actual exposure in the three live funds was lower.
iSIF (ICICI Prudential MF)
Benchmark 10% · Held: About 2.2%
qSIF (Quant MF)
Benchmark 30% · Held: No separate commodity slice shown
It held about 9% in silver in June
DynaSIF (360 ONE MF)
Benchmark 15% · Held: About 7%
The category permits greater commodity participation, but the funds are not necessarily using the full room available to them, because not capturing the right direction in a commodity can produce very unfavourable results.
It will be worth watching whether commodity exposure increases over time and how managers use it when market conditions change.
Three funds, one label
The category name tells us very little
The three live funds illustrate why the category name alone says little about the portfolio an investor is buying.
Strong income component
DynaSIF
360 ONE MF
A sizeable allocation to REITs and InvITs, alongside higher-yielding corporate bonds.
Familiar names, plus bonds
iSIF
ICICI Prudential MF
Large, familiar companies with options sold against them, alongside a substantial allocation to high-quality bonds.
Concentrated, low market link
qSIF
Quant MF
A concentrated portfolio, largely in smaller companies, with relatively low sensitivity to the broader market during the period observed.
6.8% – 54%
Debt across the three
~1% – 36%
REITs & InvITs across the three
6.5% – 8.4%
Bond yields across the three
The differences are visible in the numbers too. Debt allocations ranged from about 6.8% to 54%, while REIT and InvIT allocations ranged from around 1% to 36%. Reported bond yields ranged from 6.5% to 8.4%. They reflect different portfolio construction choices within the same category.
Look beyond the category label. The monthly factsheet, investment strategy, portfolio holdings and risk disclosures matter much more than the name of the product.
Early snapshot
What do the early returns tell us?
All three funds were only around four to seven months old at the time of this comparison. The following numbers are therefore an early snapshot, not a basis for drawing long-term conclusions.
Direct-plan absolute returns up to 30 September 2026:
| Fund | 1 month | 3 months |
|---|---|---|
| iSIF | –1.46% | +2.14% |
| qSIF | +13.63% | +24.41% |
| DynaSIF | –0.78% | +1.50% |
qSIF figures as printed in its factsheet. iSIF and DynaSIF worked out from the month-end NAVs in their factsheets.
Hybrid Long-Short, 3 months
–1.5% to +4.7%
AAA, 3 months
+1.5% to +24.4%
Over the same three-month period, Hybrid Long-Short funds ranged from approximately –1.5% to +4.7%, while the AAA funds ranged from +1.5% to +24.4%. The difference within AAA itself is striking, but it needs context: these are very young funds with materially different portfolios and strategies. A concentrated equity portfolio can perform very differently from a portfolio built around bonds, options and listed infrastructure assets. Past performance may not be sustained.
Before you invest
A few things investors should keep in mind
The flexibility of the category comes with a few practical considerations.
- Benchmarks are not directly comparable. Each fund has selected its own benchmark, with different equity weights and indices. Comparing returns against the benchmark without understanding its composition can be misleading.
- Today’s risk label does not capture every possible portfolio. A fund’s risk level reflects its current portfolio and the applicable risk-assessment methodology. Its broad mandate means its exposure can change.
- Redemption terms differ. DynaSIF allowed redemptions on Mondays, qSIF on Tuesdays and Wednesdays, and Summit’s stated schedule included Mondays and Wednesdays. Exit loads can also vary. These are not products to treat as substitutes for money needed at short notice.
- The management team matters more. A wider mandate gives a fund manager more choices, but it also makes the quality of those decisions more important.
October
New fund offers in the AAA category
October saw two NFOs in the AAA Long Short category.
Tata MF · NFO 23 Sep – 7 Oct
Titanium
Benchmark: 35% BSE 200, 50% short-term bonds and 15% commodities.
Invesco MF · NFO 12 – 26 Oct
Summit
Built around arbitrage opportunities across shares, indices and commodities, alongside special situations. Its benchmark includes a 20% commodity allocation.
With these launches, the category is expanding beyond its initial set of funds. The next stage will be about how these strategies behave in live markets and whether investors find a place for them in their portfolios.
Three things to watch in the coming months
- 1Whether actual commodity allocations move closer to benchmark weights.
- 2How portfolio allocations change when equity markets correct or interest-rate conditions shift.
- 3Whether investor interest in AAA continues to grow, especially among the MAAF mutual fund investor category, even as Hybrid Long-Short remains the much larger category.
See how these funds stack up, side by side
Track NAVs, returns and holdings for every live SIF on SIFedge.
Source: SIFedge.com and relevant AMC data (factsheets as on 30 September 2026). Returns are absolute, not annualised.
Risk disclosure: Investments in Specialised Investment Funds involve relatively higher risk, including the potential loss of capital. Past performance may not be sustained. Read all scheme documents carefully before investing. This is not investment advice.
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