SIFs were introduced by SEBI as a product sitting between mutual funds and portfolio management services. Illustration: B. Sainath
Investors have a new choice in the investment space. But the question is not whether you should choose a Specialised Investment Fund, or SIF, over a mutual fund. The more relevant question is: what does an SIF do that a mutual fund cannot? That is where the difference lies.
SIFs were introduced by the Securities and Exchange Board of India (SEBI) as a product sitting between mutual funds and portfolio management services (PMS). Mutual funds are accessible with very small amounts, while PMS requires a minimum investment of ₹50 lakh. SIF comes in between, with a minimum investment of ₹10 lakh. That makes SIF a product for investors who have accumulated meaningful financial wealth but may not want to move into PMS. But the ₹10 lakh minimum is not the most important feature of SIF.
The important feature is what the fund manager is allowed to do with your money. A conventional mutual fund is largely a long-only product. An SIF has more room to manoeuvre. It can take unhedged short positions through derivatives, subject to the prescribed limits, up to 25% of net assets for certain strategies.
Going short means taking a position that benefits if the price falls. Therefore, if the fund manager believes a stock, sector or market is likely to decline, the SIF has a tool that a conventional mutual fund does not have. This can act as a brake when markets are falling. There is a catch. A tool is useful only if the fund manager uses it correctly. A wrong short call can hurt returns just as a wrong long call can.
SIFs are still a nascent product, but the early numbers are striking. As on July 31, 2026, SIF assets under management were ₹23,177 crore, with 94,447 folios. At the end of December 2025, AUM was ₹4,892 crore and folios were 20,779.
The ₹10 lakh minimum investment clearly has not stopped investors from coming in. A simple calculation makes the point.
Divide the ₹23,177 crore of AUM by 94,447 folios and the average comes to about ₹24.5 lakh per folio. This is more than twice the regulatory minimum.
A folio is not the same as a unique investor, since one investor can have several folios.
There were 30 SIF funds across fund houses as on July 31, 2026. Of these, 16 were equity-oriented and 14 were hybrid. There is no debt SIF, although SEBI has provided for debt-oriented SIF strategies.
How to evaluate an SIF?
Do not compare an SIF with all mutual funds. Compare it with the closest mutual fund strategy.
And then ask what the SIF does differently.
Take an Equity Long-Short SIF. The closest mutual fund comparison could be a flexi-cap, large and mid-cap or focused equity fund. All can take meaningful equity exposure and attempt to generate returns through stock selection. But there is a crucial difference. The mutual fund manager is predominantly playing on the upside. If the manager believes that a particular stock is going to fall, the usual response is to reduce or exit the position. The SIF manager has another option: take a short position, within the permitted limit. The manager can potentially make money not only by identifying what should go up, but also by identifying what should go down. An Equity Ex-Top 100 Long-Short SIF is broadly comparable with mid-cap, small-cap or flexi-cap mutual funds. The commonality is that the portfolio can look beyond the largest companies.
The difference again is the ability to use short exposure. This matters because the further you move down the market-cap curve, the greater the dispersion between winners and losers can be.
Is SIF better than MF?
There is no such simple answer. For most investors, mutual funds will continue to be the basic building blocks of a portfolio. They are accessible, diversified and available across a wide range of strategies. SIF is meant for a different investor.
If you have ₹10 lakh or more to allocate to a single strategy and want something beyond the conventional long-only approach, SIF deserves a look.
But do not buy an SIF simply because it is sophisticated. And do not buy it merely because the manager can short.
The right approach is to compare the SIF with its closest MF proxy. Look at the portfolio, investment mandate and how the strategy behaved in rising as well as falling markets. Look at costs. And, most importantly, examine how the fund manager has actually used the additional flexibility.
Joydeep Sen is a corporate trainer (financial markets) and author.
Published – September 14, 2026 06:45 am IST