Specialised Investment Funds (SIFs) have scaled to nearly ₹40,000 crore in assets within their first year of operation. While these products offer greater flexibility through derivative use, their complexity requires careful consideration regarding liquidity and risk. Investors must understand the specific requirements, including a minimum entry ticket of ₹10 lakh, before committing capital.
Specialised Investment Funds (SIFs) in India have seen rapid adoption since their introduction in October 2025, with assets under management (AUM) surging to nearly ₹40,000 crore by September 2026. These investment vehicles are designed to sit between traditional mutual funds and high-ticket products like Portfolio Management Services (PMS), offering managers more flexibility in strategy and asset allocation.
Understanding the Strategy Mix
The growth in SIFs has not been uniform across all categories. Market data indicates that hybrid long-short strategies currently dominate the space, accounting for a significant majority of the total AUM, estimated at around 63 to 69 percent. Unlike standard mutual funds, SIFs are permitted to take limited short exposure—up to 25 percent of their total assets—using derivatives. This feature allows fund managers to hedge positions or bet on price declines, a capability that traditional open-ended equity mutual funds do not possess. As of October 2026, the sector primarily focuses on equity and hybrid products, with no debt-oriented SIF strategies currently active.
Why Complexity Matters for Investors
While the flexibility of SIFs appeals to active investors, it introduces risks that differ from conventional retail schemes. The most notable difference for investors is the liquidity structure. While standard mutual funds typically offer daily liquidity, many SIFs implement specific redemption windows, such as fortnightly or weekly cycles. This means investors may not be able to exit their positions instantly during periods of market stress.
Furthermore, the entry barrier is significantly higher than that of regular mutual funds. Regulations mandate a minimum investment of ₹10 lakh per investor. Financial planners often suggest that these funds should ideally be reserved for high-net-worth individuals or family offices with a larger total corpus, often recommending a threshold of at least ₹70 lakh, to ensure that the SIF allocation remains a small, manageable portion of a wider portfolio.
Managing Risk and Expectations
Investors considering these funds should look beyond past performance, which is naturally limited due to the short history of these vehicles. The performance of a SIF is heavily dependent on the skill of the fund manager in executing complex arbitrage or long-short trades. Consequently, conducting due diligence on the manager’s track record, the fund’s specific derivative exposure, and the underlying expense structure is essential.
Because these products are not as regulated in terms of standardisation as traditional mutual funds, they carry a higher potential for capital loss if the chosen strategy fails to navigate market volatility effectively. As these funds continue to gain traction, the key update for investors will be how these strategies perform during periods of sustained market downturns, as well as any changes in redemption terms or expense ratios imposed by asset management companies.