SIF assets grow nearly 7x in eight months, Hybrid Long-Short category leads industry expansion

Since their introduction in October 2025, Specialized Investment Funds (SIFs) in India have grown sharply, with assets under management climbing from about Rs 2,010 crore to nearly Rs 14,000 crore.

SIFs were launched to provide more advanced strategies within the mutual fund structure. The segment began with four schemes and Rs 2,010 crore in assets. In just eight months, the number of live strategies has increased to 21, and investor folios have risen more than five times to 56,749.

According to an Edelweiss Mutual Fund report, Hybrid Long-Short funds now dominate the SIF space, holding Rs 9,709 crore, or roughly 70 percent of total SIF AUM. Equity Ex-Top 100 Long-Short funds manage Rs 1,957 crore, while Equity Long-Short funds account for Rs 1,852 crore. Sector Rotation Long-Short and Active Asset Allocator Long-Short strategies are still small, with assets of Rs 35 crore and Rs 261 crore, respectively.

Within Hybrid Long-Short, Altiva Hybrid Long-Short Fund is currently the largest, with an AUM of Rs 4,507 crore as of May, which had crossed Rs 5,000 crore by June 23. Magnum Hybrid Long-Short Fund is next with Rs 3,454 crore, and iSIF Hybrid Long-Short Fund manages Rs 844 crore.

The product suite in SIFs is steadily widening. By May 2026, eight Hybrid Long-Short strategies had either been launched or filed, alongside seven Equity Long-Short and three Equity Ex-Top 100 Long-Short strategies. Participation has grown in tandem with assets: the number of distributors holding the mandatory NISM Series XIII certification for selling SIFs has increased from around 2,000 in the early phase to over 5,300.

Industry players say this growth has outpaced initial projections. Radhika Gupta, Managing Director and CEO of Edelweiss Mutual Fund, noted that SIFs blend the flexibility usually associated with PMS and AIF structures with the tax treatment and regulatory comfort of mutual funds.

She said, “We were very positive on the SIF category. It offers the best of both worlds—much of the flexibility of AIFs and PMS, along with the strong tax benefits of mutual funds.” She also highlighted that the minimum investment of Rs 10 lakh makes SIFs far more accessible than PMS and AIF products, which typically need Rs 50 lakh to Rs 1 crore. With overall SIF assets nearing Rs 14,000 crore, she expects them to become a more meaningful contributor to her fund house’s business.

Market observers link the rise of SIFs to a shift in investor behaviour. Sandeep Seth, founder of SIF360, said investors are increasingly prioritising risk-adjusted returns instead of only chasing absolute performance.

He explained that he has worked with long-short strategies both in India and overseas, and that such approaches are usually associated with more mature markets. “Indian investors are evolving. Earlier, they looked only at returns; now they are focusing on risk-adjusted returns,” he said.

Seth believes Hybrid Long-Short funds have drawn the most interest because they bridge the gap between arbitrage funds and conventional hybrid schemes. “The hybrid category has seen the maximum flows and attention from investors across India and from NRIs,” he added.

This shift is also visible in portfolio reallocation. “Investors who earlier used arbitrage or debt funds are now reallocating money into SIFs,” Seth said. He also pointed out that demand is no longer limited to major metros, with growing interest from cities like Pune, Chandigarh and Jaipur.

Distributors, however, stress that the category is still in an early adoption phase and needs extensive education. Kolkata-based distributor Chandan Bhagat said that initial demand was muted because investors lacked clarity on the product and awareness was low. “Now awareness is improving and, after the recent market correction, investors are paying more attention to risk-managed solutions,” he said.

Seth also emphasised that scaling up will depend heavily on awareness and education, with distributors at the centre of this effort. “Awareness spreads mainly through distributors, so increasing the pool of qualified intermediaries is critical for industry growth,” he said, noting that long-short strategies are relatively new to Indian retail investors. While some AIFs used such strategies earlier, the minimum ticket size of Rs 1 crore kept them out of reach for most investors.

One barrier to faster expansion has been the certification requirement. A distributor, who did not wish to be named, said the NISM Series XIII exam is wide-ranging and tough, which discourages some existing mutual fund distributors from entering the SIF space. There are indications that SEBI may simplify this exam, which could draw more intermediaries into the segment.
Distributors also point out that SIFs are not mass-market products. Bhagat said, “Not every investor is the right fit for SIF,” explaining that he usually introduces these products to clients with portfolios of around Rs 50 lakh who are seeking diversification. He added that SIFs are suitable for investors who want diversification, can commit more than Rs 10 lakh, but do not meet the Rs 50 lakh–Rs 1 crore thresholds typically required for PMS. For such clients, SIFs help bridge that gap.

In their view, SIFs have strong potential but will need time to prove themselves across multiple market cycles. At present, Hybrid Long-Short and Equity Long-Short strategies are seeing the strongest traction. Hybrid Long-Short funds, in particular, are attracting investors who want returns better than fixed deposits while avoiding the full volatility of pure equity exposure.

‍