Hybrid long-short Specialised Investment Funds faced a difficult October 2026, averaging a 0.5% loss. While Kotak Infinity Hybrid posted a gain of 0.34%, Quant Mutual Fund’s qSIF Hybrid fell 3.12%, highlighting the high volatility and drawdown risks common in these complex, derivative-heavy strategies.
The hybrid long-short category of Specialised Investment Funds (SIF) experienced a challenging October 2026, as market volatility impacted returns across the board. Data shows that the category averaged a decline of 0.5 percent for the month. Out of 11 comparable strategies analyzed, only four managed to end the month with positive gains, illustrating the difficulty these funds face in navigating uncertain market conditions.
Among the few funds that performed well, Kotak Infinity Hybrid led the group with a return of 0.34 percent. Other strategies also stayed in positive territory, including Aditya Birla Sun Life Mutual Fund’s Apex Hybrid, which returned 0.32 percent, while Bandhan Mutual Fund’s Arudha Hybrid and Tata Mutual Fund’s Titanium Hybrid posted modest gains of 0.2 percent and 0.05 percent, respectively.
In contrast, several other funds in this space faced sharper declines. Quant Mutual Fund’s qSIF Hybrid recorded a 3.12 percent drop for the month, marking the steepest decline in the peer group. ICICI Prudential Mutual Fund’s iSIF Hybrid and Edelweiss Mutual Fund’s Altiva Hybrid also saw losses of 1.63 percent and 0.75 percent, respectively.
It is important for investors to understand the nature of these funds. Specialised Investment Funds are not standard mutual funds; they are niche investment vehicles that allow for higher flexibility, including the use of derivative strategies like short positions. While this structure aims to capture market opportunities, it also introduces significant volatility. A closer look at the performance data reveals that the drop in value for funds like the Quant qSIF Hybrid was not just a steady decline but included a peak-to-trough drawdown of approximately 5.12 percent during the month. This means that at some point in October, the fund's value was significantly lower from its peak, reflecting the rapid changes in price that can occur in derivative-heavy portfolios.
Investors in these types of strategies should look beyond simple monthly returns. A fund that gains in one month may experience large price swings that are not immediately visible in the final monthly number. When evaluating these products, the key is to prioritize risk-adjusted performance and consistency rather than focusing solely on short-term gains or losses. The primary monitorable for investors going forward will be how these funds manage their derivative exposures and whether they can limit large price drops during periods of market stress.