At a time when the stock market has remained highly volatile, assets under specialised investment funds (SIFs) have grown at a rapid pace. Since October, assets under SIFs have risen from ₹2,000 crore to ₹13,800 crore in May — nearly a seven-fold increase.
SIFs are typically targeted at experienced investors, with a minimum investment requirement of ₹10 lakh. Launched in April 2025, the category currently has 16 fund houses offering active SIF schemes, compared with more than 50 mutual fund houses.
Experts believe SIFs are attracting investors who are looking beyond traditional equity or debt funds. Swarup Mohanty, vice chairman and CEO of Mirae Asset Investment Managers, said that while a flat or volatile market may have made investors cautious, SIFs allow investors to manage risk more actively compared with linear, long-only products such as mutual funds.
Decoding Hybrid Dominance
While fund houses have introduced both equity-oriented and hybrid strategies, investor interest has been highest in hybrid long-short schemes. These schemes account for ₹9,709 crore, or 70% of total SIF assets.
A key difference between mutual funds and SIFs is their ability to take both long and short positions, allowing investors to potentially benefit during both market upturns and downturns. Hybrid long-short schemes, for instance, invest at least 25% of their assets each in equity and equity-related instruments and debt instruments, with additional short exposure of up to 25% through unhedged derivative positions in equity and debt instruments.
Another hybrid SIF strategy — active asset allocator long-short funds — can invest in REITs, InvITs and commodity derivatives in addition to equity and debt instruments.
Radhika Gupta, MD and CEO of Edelweiss Asset Management, said hybrid long-short strategies can complement fixed-income allocations for investors seeking potentially higher returns while being comfortable with moderately higher risk.
Fundamental Guardrails
The new product category has also provided existing fund houses an opportunity to establish leadership. Gupta said that as SIFs gain popularity, leadership in the segment will depend on fund houses having strong investment capabilities, robust risk management and the ability to create differentiated solutions for investors.
According to Mohanty, SIFs are not a category where early entry alone will determine success. He said fund houses will need to get fundamentals such as strategy, risk frameworks and talent right while keeping investor interests at the centre. He added that the category’s performance should be evaluated over years rather than a few quarters.
Despite the rapid growth in assets, Mohanty remains cautious about the near-term outlook, citing developing infrastructure, distributor readiness and limited investor familiarity. However, he sees significant medium-term opportunities for SIFs due to their positioning as a bridge between traditional wealth products and alternative investments.
He said the ability of SIFs to manage both upside and downside will be clearer once the products go through a full market cycle.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors should assess their financial goals, risk appetite and consult a qualified financial advisor before making investment decisions.
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