A quiet shift is underway in India’s investment landscape. While lumpsum inflows into equity mutual funds dropped sharply by 40% last month, a growing pool of affluent investors appears to be redirecting capital toward specialised investment funds, or SIFs—a relatively new product category designed to sit between traditional mutual funds and alternative investment funds. Unlike regular mutual funds, SIFs require a minimum investment of ₹10 lakh, making them largely accessible to high-net-worth individuals (HNIs) seeking more sophisticated strategies. Since their rollout in 2025, SIFs have expanded at a striking pace, with industry assets under management climbing from ₹2,010 crore in October 2025 to nearly ₹13,814 crore by May 2026.
The real magnet has been hybrid long-short strategies. These funds now account for roughly 70% of total SIF assets, or ₹9,709 crore, making them the dominant segment in the category. Their appeal lies in a rare combination: downside protection during volatile markets and tax efficiency typically associated with equity investing. Average ticket sizes underscore who is buying in—hybrid long-short schemes command an average folio size of ₹33.86 lakh, far above most other SIF categories. According to Radhika Gupta, hybrid SIFs are gaining traction because they offer a more attractive risk-return balance than products such as equity savings or income-plus-arbitrage funds. Recent market turbulence has only strengthened that narrative, as several hybrid SIFs delivered positive absolute returns even during sharp corrections.
Industry participants say another powerful driver is accessibility. Long-short strategies were previously available mainly through Category III AIFs, which typically require a ₹1 crore minimum commitment. SIFs slash that entry barrier to ₹10 lakh, opening the door to a broader HNI base. Investors are increasingly using these funds not only as tactical allocations during volatile or range-bound markets, but also as diversification tools—mixing defensive and aggressive long-short approaches within the same portfolio. Still, experts caution against declaring SIFs a mainstream alternative just yet. The category remains young, with limited performance history, and broader adoption will depend heavily on investor education, distributor readiness, and sustained returns. For now, SIFs are less a replacement for mutual funds and more a fast-growing niche—one that wealthier investors are watching closely.