ICICI Pru has launched its iSIF Equity Long Short Fund which complements the earlier launch of its Equity Ex-Top 100 Long Short Fund.
True to its DNA, this new fund’s overarching goal will beto provide HNIs an equity investing experience with lower volatility through usage of an array of asset allocation and derivative strategies that the SIF platform allows.
Managing net equity exposure dynamically, managing capsize allocations dynamically, managing style tilts in the market from time to time and judicious stock and sector selection are all expected to be alpha contributors, with appropriate usage of derivative strategies adding another dimension to the overall returns.
Do not expect Mittul to go trigger happy with naked short positions. He says shorting strategies will primarily be used for portfolio protection purposes.
Mittul highlights that different strategies aim atextracting alpha at different points in a stock’s cycle. A strategy aimed at minimizing drawdowns (which is what this fund aims to deliver) adds more alpha in weak markets while a momentum investing strategy adds its highest alpha as the cycle peaks.
The former in his view is more investor-friendly as it potentially delivers the same or perhaps higher alpha compared to momentum investing, but with a much smoother journey.
He expects a relief rally in the markets whenever the Gulf situation gets resolved – but thereafter sees a range bound market with more sector rotation rather than directional moves at a market level.
He prefers export oriented businesses which can benefit from a weak currency – pharmaceuticals being a case in point. He likes financials too – especially the larger banks where value is clearly visible.