Specialised Investment Funds (SIFs) are seeing rapid adoption, with assets under management climbing to ₹31,175 crore in August 2026 from ₹23,177 crore in July. Designed for investors with at least ₹10 lakh, these SEBI-regulated products allow managers to use defensive strategies like short-selling. While they offer more tactical flexibility than standard mutual funds, they carry higher complexity and are better suited for investors comfortable with sophisticated market risks.
The investment landscape in India is shifting as Specialised Investment Funds (SIFs) gain momentum. Introduced by the Securities and Exchange Board of India (SEBI) in April 2025, these vehicles are designed to fill the gap between standard mutual funds and high-ticket Portfolio Management Services (PMS). As of August 31, 2026, the category has reached ₹31,175 crore in assets, showing a sharp rise from the ₹23,177 crore recorded just one month earlier in July.
A New Bridge for Investors
For many years, the Indian market offered a clear divide. Mutual funds were the primary tool for retail investors, while PMS catered to those with much larger amounts of capital. SIFs act as a middle ground. With a minimum investment requirement of ₹10 lakh, they allow a wider group of investors to access strategies that were previously out of reach. However, these are not traditional mutual funds. They are designed for investors who understand that seeking higher control can also mean taking on more risk.
Tactical Power and the 25% Rule
The key feature that separates an SIF from a standard mutual fund is the tactical freedom given to the fund manager. While most mutual funds are restricted to betting on stocks that they expect to rise, SIF managers have the authority to use derivatives to take unhedged short positions. In simple terms, this means they can profit even when the market is falling, or use these tools to protect the portfolio from sudden drops. SEBI permits managers to allocate up to 25% of the fund’s assets to these defensive strategies.
Understanding the Risks
While the flexibility to 'short' the market sounds attractive, it is a double-edged sword. This strategy requires a high level of skill. If the market moves in an unexpected direction, these trades can lead to faster losses than a standard buy-and-hold strategy. Because of this, SIFs carry a higher risk profile than the average equity mutual fund. Investors should also consider that these are not exchange-traded products, meaning they do not trade like stocks on the NSE or BSE. Liquidity—or how easily one can exit the investment—depends on the specific redemption rules of the fund.
Since this is a relatively new category, there is not yet a long track record for investors to judge how these funds perform across different market cycles. The most critical factor for any investor will be the manager’s ability to execute these complex trades correctly without hurting the portfolio’s core value. As more schemes launch, the primary monitorable will be the fund manager’s performance history and the actual cost structure of these products compared to the potential returns they generate.