MSIF Equity Long-Short

The investment objective, verbatim from the ISID. "The investment objective of the Investment Strategy is to generate long term capital appreciation by investing predominantly in listed equity and equity related instruments while selectively employing tactical short positions through derivatives to provide risk-adjusted returns across market cycles. However, there is no assurance that the investment objective of the Investment Strategy will be achieved." The ISID places the strategy in the category "Equity Oriented Investment Strategy: Equity Long-Short Fund" and describes it as "An open ended equity investment strategy investing in listed equity and equity related instruments including limited short exposure in equity through derivative instruments". It is a new strategy of MSIF, Mahindra Manulife Mutual Fund's Specialized Investment Fund, and the ISID notes there were no other existing MSIF strategies in the equity category to compare it with. (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)

An open-ended strategy with daily liquidity. Units are offered for subscription and redemption at NAV-based prices on all business days. No notice period currently applies, though the AMC may introduce one of up to 15 working days, in which case a redeeming investor receives the NAV at the end of the notice period. Redemption proceeds are dispatched within 3 working days under normal circumstances. The units are not proposed to be listed on any stock exchange, although the AMC/Trustee may list them in future. The NFO ran from 30 September to 14 October 2026 at Rs. 10 per unit, and the strategy re-opened for continuous sale and repurchase on 26 October 2026. (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)

The asset-allocation table. Under normal circumstances the ISID sets equity and equity related instruments at 80%-100%, debt and money market instruments at 0%-20% and units issued by InvITs at 0%-10% (the table header reads "% of total assets"). Overseas securities are permitted up to 20% of net assets, and the strategy may invest US$ 5 million overseas within six months of the NFO closing. Derivatives may be used up to 100% of net assets, and cumulative gross exposure across equity, debt, derivatives, InvITs and other permitted assets should not exceed 100% of net assets. The strategy will not invest in AT1/AT2 bonds, debt with structured obligations or credit enhancements, credit default swaps, repo in corporate debt, unrated debt or securitised debt. (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)

How the short side is bounded. The ISID allows unhedged short exposure through derivative instruments of up to 25% of net assets, in addition to derivative exposure taken for hedging and portfolio rebalancing. Its indicative exposure table caps equity derivatives used short for non-hedging purposes at 25% of net assets and equity derivatives used long for non-hedging purposes at 50% of net assets, while hedging and rebalancing use may run to 100% of the equity portfolio. Short exposure may be taken through exchange-traded stock futures, index futures, sector index futures and options, based on the fund manager's assessment of valuations, earnings outlook, business fundamentals, market trends, sectoral developments, macroeconomic factors and quantitative indicators. Securities lending is limited to 20% of net assets, with no more than 5% through a single intermediary. (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)

The investment approach as the scheme documents describe it. The strategy follows an active management style and may invest across market capitalisations, sectors and industries. Long holdings are to be selected through a combination of bottom-up stock selection and top-down thematic views, with factors including earnings growth prospects, capital allocation and return ratios, earnings and quantitative analysis, and valuations relative to intrinsic value, underpinned by a macroeconomic outlook overlay. Debt holdings are intended to provide income, liquidity and portfolio stability. (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)

Risk controls, in the AMC's own terms. For unhedged derivative positions the ISID describes defined internal limits and continuous monitoring, position sizing, exposure limits, regular mark-to-market monitoring, and margin and collateral management; the fund manager may rebalance or exit positions, including through stop-loss mechanisms where appropriate, and derivative exposures are to be in liquid instruments and diversified across instruments, strategies and tenors. The AMC's presentation sets out a three-layer process in which macro analysis sets the net exposure, stock selection builds the portfolio (including a quant overlay, volatility baskets, hedge levels and bottom-up short candidates), and risk management enforces guard rails: stock-level hedges, sector deviation limits, a portfolio hedge, single-stock position limits, and drawdown triggers and exits. The presentation labels these parameters illustrative and gives no numerical thresholds for them. (Source: MSIF ISID dated 10 September 2026; MSIF Equity Long-Short Fund presentation, data as of 31 August 2026.)

Where a short idea comes from. The presentation and leaflet state that a short position is initiated only on evidence of at least one of three catalyst levels and not on a directional view alone: external factors (regulatory framework, government divestment, political or geopolitical risk), business factors (pricing competition, corporate governance issues, questionable acquisitions, high leverage, management changes or pledge offloads) and earnings and valuation factors (high valuations with moderating earnings, compressing multiples, EPS downgrades ahead of consensus). They also illustrate a four-book structure: a core portfolio (1-3 year horizon), dynamic longs (up to 1 year), event-driven shorts (less than 1 year) and a review list held until clarity improves. Both documents mark this material as illustrative only. (Source: MSIF Equity Long-Short Fund presentation, data as of 31 August 2026; MSIF Equity Long-Short Fund leaflet.)

Minimum-investment mechanics follow the SEBI SIF threshold. The minimum application is Rs. 10,00,000 and in multiples of Re. 1 (Rs. 1,00,000 for accredited investors), and the minimum additional purchase is Rs. 1,000. The Rs. 10 lakh threshold is measured at PAN level across all MSIF strategies and excludes holdings in Mahindra Manulife Mutual Fund schemes. A fall below the threshold caused by a NAV decline is not treated as a violation, but the investor may then only redeem the entire remaining amount; an active breach leads to units being frozen for debit, a 30-calendar-day notice to rebalance and, failing that, automatic redemption. SIP and STP instalments are Rs. 5,000, subject to the Rs. 10 lakh threshold (Rs. 1 lakh for accredited investors). (Source: MSIF ISID dated 10 September 2026; MSIF KIM dated 26 October 2026.)