ABSL’s Apex SIF business has launched its first product – Apex Hybrid Long Short Fund with a unique Equity Savings + positioning in contrast to the Arbitrage+ and BAF+ positionings that peer fund houses have chosen for their hybrid long short funds.
Lovelish points out that in the MF space, arbitrage funds have grown beyond Rs. 3 lakh crs AuM and the BAF category is much larger. Equity savings as a category has not scaled up sufficiently – especially given its risk-return profile.
ABSL has a conservative equity savings fund (10-20% equity) in the MF space and a BAF. This new Hybrid Long Short will be positioned as an aggressive equity savings strategy (30-40% equity). The strategy will strike a balance between too much dependence on arbitrage for returns (arbitrage + strategies) and too much dependence on equity for returns (BAF + strategies).
The fund will have 4 streams of returns:
(1) Directional equity (0-40%) which will comprise Nifty50 passive of upto 30-35% and special situations of 0-10%.
(2) Options strategies – either net long or short
(3) Cash-futures arbitrage
(4) Debt
Asset allocation is guided by an in-house model, which interestingly has been suggesting a 0 allocation to equity since September2025. In keeping with this, the indicative initial allocation could be 35-40% in arbitrage, 45-50% in debt, 5-7% in options and 5-10% in InVits & REITs.
While Lovelish does not intend to use the provision forshort positions to take net short positions, he will be using this facility as an active risk management strategy at a portfolio level.
In terms of investor outcomes, this new fund aims to deliver 150 bps over traditional equity savings mutual funds on a rolling 18 month basis while also trying to ensure that on any rolling 6 month basis, the fund does not dip into negative returns territory.
Investors with 18-24 month or above time horizon can reasonably expect 9-9.5% returns with low probability of capital erosion in any 6 month rolling basis.