Derivatives and exposure limits · a SIF concept, explained from SEBI’s rules.
In one line
A derivative position taken to reduce or offset the risk of something the strategy already holds, such as a short future against shares it owns. Hedges do not use a SIF's 25% unhedged short limit.
SEBI's FAQs define hedged exposure as a derivative position taken to reduce or offset the risk of an existing position in the underlying security or its derivatives, whatever its expiry (B25). The circular allows derivatives for hedging and portfolio rebalancing in addition to the 25% for other purposes (para 6.1.1). A calendar spread counts as a hedge (B26) and so may a covered call (B33); an index put bought against a basket of its constituents is permitted but earns no offsetting benefit (B31).
Sources: SEBI circular on the SIF framework, 27 Feb 2025; SEBI FAQs on SIFs, Parts B and C, 22 Sep 2026
Illustrative example. A strategy owns ₹5 crore of a company's shares and sells futures on the same shares worth ₹5 crore. The short future hedges the holding, so none of the 25% unhedged limit is used.
Every SIF strategy type, within each strategy’s own offer document. All 36 live strategies are listed on our tracker; each one’s offer document sets its own limits within SEBI’s.
Buying index puts against stocks in that index is permitted and may reduce risk, but it does not qualify for offsetting benefits (FAQ B31).
Explanation only, not a recommendation. Trustner Asset Services Pvt. Ltd. is an AMFI-registered Mutual Fund & SIF Distributor (ARN-286886) and may receive commission from fund houses. Investments in Specialized Investment Fund involves relatively higher risk including potential loss of capital, liquidity risk and market volatility. Please read all investment strategy related documents carefully before making the investment decision.