SIFs gain investor traction with over Rs 38,000 crore in assets. Should investors add them to their portfolios this Diwali?

Specialised Investment Funds (SIFs) are gaining traction among Indian investors, with assets under management (AUM) crossing Rs 38,000 crore in September 2026. Introduced as an investment option between traditional mutual funds and portfolio management services (PMS), SIFs offer fund managers greater flexibility to use long-short strategies and derivatives while remaining within the mutual fund regulatory framework.

The category has witnessed rapid growth since the first SIF was launched in October 2025. With more fund houses introducing differentiated investment strategies, investors may be wondering whether SIFs deserve a place in their portfolios this Diwali.

Rajan Sarkar, Director & Unit Head, Anand Rathi Wealth Limited told ETMutualFunds that investors should understand that SIFs are relatively new products in India and have not yet experienced across different market cycles.

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While they offer differentiated strategies and greater flexibility, it is also important to consider that these products are associated with multiple risks, like a higher minimum ticket size of Rs 10 lakh which makes them less accessible and can create concentration risks, particularly for investors who do not have a sufficiently large portfolio, he further said.

Suraj Nanda, Fund Manager – SIF, Tata Asset Management shared with ETMutualFunds that SIF strategies may offer investors additional portfolio-management flexibility, including permitted use of derivatives, subject to the investment objective and strategy, the ability of the product to dial up and dial down the equity risk in the fund is what makes the product category special.

“Investors need to shift their thinking more towards risk management rather than just on returns. We are currently living in a VUCA world. In the current geopolitical scenario as well as the technology revolution around AI, it is important to have a category like SIF in the portfolio which can adapt to the global and domestic risks and seek to manage portfolio exposures dynamically, subject to the strategy and prevailing market conditions.”SIFs may be considered by the investors who understand the strategy, associated risks and minimum investment requirements, and for whom the product is suitable considering their investment objectives and risk profile, Nanda further said.

SIF assets stood at Rs 38,287 crore in September 2026, marking a 22.8% on-month rise. The category recorded positive inflows of Rs 7,578 crores during the month driven by hybrid investment strategy and equity-oriented investment strategy. One new equity-oriented strategy was launched, mobilizing Rs 377 crore.

SIF strategies have received a total inflow of Rs 7,578 crore in September compared to Rs 7,699 crore in August. They have received Rs 37,606 crore in the last 12 months, according to a report by ValueMetrics.

Should Sifs Replace Existing Equity Or Debt Investments?

Specialised Investment Funds (SIFs) offer investors access to strategies that go beyond the conventional mutual fund structure, including long-short positions and more flexible portfolio management.

However, with a minimum investment requirement of Rs 10 lakh, they are meant for investors who have a higher risk appetite and a well-diversified portfolio. For investors considering SIFs, deciding how much to allocate is as important as choosing the right strategy. Should they set aside a small portion of their existing equity or debt investments for SIFs, or treat them as a separate allocation over and above their traditional mutual fund holdings?

Nanda said that traditional portfolio construction is 60% equity and 40% in bonds. Around 50% of equity allocation may move to SIF category however, the outcome will depend on the strategy, portfolio positioning and market conditions, and may differ materially across market cycles.

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Also, the SIF category should be looked at more from an SIP perspective as the risk is managed dynamically in the product while ensuring compliance with the ₹10 lakh minimum investment threshold, he further said.

Rajan said that currently we suggest investors to avoid allocating to SIFs and investors should understand that portfolio allocation should be driven by investment objectives, tenure and risk profile.

He further said that existing equity and debt investments should be structured to meet these requirements rather than being diverted towards relatively new products. Until SIFs establish a meaningful track record across market cycles, investors are suggested to avoid investing in this category and can consider investing across traditional equity and debt mutual funds.

Investment Strategies Under Sifs

SIFs offer multiple investment strategies across equity, debt, and hybrid asset classes. There will be three equity oriented investment strategies: equity long short fund, equity ex-top 100 long-short fund, and sector rotation long-short fund.

Similarly debt will have two investment strategies: debt long-short fund and sectoral debt long-short fund. Hybrid will also have two investment strategies: hybrid long-short fund and hybrid long-short fund.

What Does Each Sif Strategy Mean?

In Equity Long-Short Fund, the minimum investment in equity and equity related instruments will be 80% and maximum short exposure through unhedged derivative positions in equity and equity related instruments will be 25%.

In Equity Ex-Top 100 Long-Short Fund, the minimum investment in equity and equity related instruments of stocks excluding top 100 stocks by market capitalization will be 65% and maximum short exposure through unhedged derivative positions in equity and equity related instruments of other than large cap stocks will be 25%

In Sector Rotation Long-Short Fund, minimum investment in equity and equity related instruments of maximum 4 sectors will be 80%, and maximum short exposure through unhedged derivative positions in equity and equity related instruments will be 25%.

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Where are SIFs headed over the next 18 months?

Rajan said that SIFs are likely to attract investor interest as the industry introduces more differentiated strategies like long-short equity, sector-focused and hybrid strategies. Their ability to use a wider range of investment strategies could attract investors for alternatives to conventional mutual funds.

However, investor interest and product innovation should not be confused with proven investment performance. Currently investors are suggested to wait for a longer performance history and greater clarity on their risk-return profile before considering any allocations, he further said.

Nanda said that he believes SIF as a category has the potential to grow very well over the next 2-3 years. It is too early to judge SIF as a category in less than 1 year. Investors will have to stay invested in the category and go through the market cycle to understand the benefit of the product.

All the products in the equity and hybrid category complement the mutual funds. It is important that investors understand the positioning of the funds before investing so that they are clear about the expectations, he further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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