Semi-active yet strategic: PPFAS Mutual Fund scheme to mirror Nifty 100

Tracks index but flexes 5 tactical levers to seize alpha passive peers can't touch

Parag Parikh Financial Advisory Services (PPFAS) Mutual Fund (MF), launching its first equity scheme in seven years, is stepping into one of the most challenging categories for fund managers.

 

The fund house is adopting a semi-active approach with its largecap fund, aiming to deliver modestly higher returns than the benchmark. Scheduled for a January 2026 launch, the scheme will largely follow the Nifty 100 index while implementing a set of “smart execution strategies” to generate alpha. 

 

At its annual unitholders’ meet on Saturday, the scheme’s fund manager, Rukun Tarachandani, outlined five strategies, including taking advantage of stock price arbitrage in cash and futures markets. “During periods of extreme market stress, index futures can trade at a discount to the index. In such cases, we can gain the same exposure by buying index futures instead of the underlying stocks,” he said.

 

The scheme also benefits from the agility of an active structure. Unlike passive index funds or exchange-traded funds, it can act on new information immediately, rather than waiting for index adjustments. This gives it an edge over passive peers during events such as index rebalancing, mergers, or demergers of constituent stocks.

 

The fund’s pricing will be in line with the expense ratio charged by Nifty 100 passive funds, typically ranging from 10 to 30 basis points.

 

Hybrid, hedged, and dynamic: Tata MF’s new SIF fund

 

Balances long, short, and flexible positions across asset classes to manoeuvre volatility

 

Tata Mutual Fund (MF) has launched the Titanium Hybrid Long-Short Fund, marking its entry into the specialised investment fund (SIF) space. The scheme will invest across equity and debt, employing a mix of strategies designed to offer a more balanced risk/return profile than conventional hybrid funds.

 

The fund aims to deliver returns similar to aggressive hybrid funds but with lower risk, said Anand Vardarajan, chief business officer, Tata Asset Management.

 

The scheme will maintain a 65–75 per cent gross equity allocation, including up to 25 per cent in unhedged short positions. Fund documents state that net equity exposure can drop to as low as 25 per cent through hedged derivatives. Debt instruments will comprise 25–35 per cent, with investments in real estate investment trusts and infrastructure investment trusts capped at 10%.

 

Asset allocation and the use of unhedged shorts and derivatives will vary with market conditions. Long positions will dominate in bull markets, while short positions and hedged equity exposure will rise when valuations are high. “Through tactical use of long and short positions, the fund seeks risk-adjusted returns while controlling volatility,” said Suraj Nanda, fund manager, Titanium SIF.