SIFs: Are they worth the Rs 10 lakh entry?

Summary: SIFs were sold on the promise of shorting, the ability to profit from falling prices, previously available only to the ultra-rich. Nine months in, most funds haven't meaningfully used that freedom. The question worth asking is what investors are actually paying for.

Summary: SIFs were sold on the promise of shorting, the ability to profit from falling prices, previously available only to the ultra-rich. Nine months in, most funds haven't meaningfully used that freedom. The question worth asking is what investors are actually paying for. Upgrades are among life’s quieter temptations. Once a phone works well enough, the next one promises a better camera. Once a car gets you around, the next one offers more comfort and control. The house is comfortable, but a little more space begins to look necessary. Most upgrades begin with a feeling that something familiar can now do more. So when you tell ordinary mutual fund investors that a new upgrade lets them do something different and seemingly exciting, like shorting, they’d naturally lap it up. That’s what has happened with Specialised Investment Funds or SIFs, the market’s star debutants. The first SIF’s NFO opened in September 2025 and the fund hit the market in October. Since then, SIF assets have grown nearly nine times - from about Rs 2,010 crore to Rs 17,858 crore by June 2026. The sparkling promise of ‘shorting’ may explain the rush. Unlike regular mutual funds, SIFs are given the freedom to go short on stocks or securities, which means profiting from a falling price or market. This is a big deal for Indian markets where sophisticated strategies, like the ability to short, was something only the ultra-rich investors in PMS and AIFs could access. SIFs offer this at a much lower entry-ticket of Rs 10 lakh. But when we sat down to take stock of the fledgling category whose earliest funds are not even a year old yet, we found something interesting. The headline promise of ‘going short’ that SIFs are getting sold upon is not actually being used actively. So are investors actually getting the ‘upgrade’ they are paying for? This story aims to answer that. What makes SIFs different? SIFs have the same regulatory oversight as mutual funds and are governed by the same SEBI rules. The difference is how they can invest compared to mutual funds. A regular fund manager can only buy securities it expects to rise and wait for that view to play out. But SIF managers can do more. They can bet on a falling price, i.e., sell a security (without owning it), concentrate on a few sectors, move more freely across asset classes, set their own windows for redemptions. Simply put, they can employ sophisticated and complex investment strategies, like those allowed in PMS and AIFs, but with a much lower minimum investment. This middle ground is captured clearly in the table ‘Where SIFs sit among your investment options’. The different tools at their disposal gives them extra room to manoeuvre. And this, as the pitch goes, can help them capture market upside, cushion the downside and give investors a smoother, controlled-risk return journey. An equity long-short SIF, for example, can buy stocks it believes will rise and short stocks it believes will fall. If that works, the fund gains from a two-sided strategy while offering a less-volatile ride. Let us elaborate. How their promise is meant to work Beneath most SIFs lies a common strategy. The manager builds a long book of shares and other assets they expect to rise, and a short book through derivatives to profit from securities they expect to fall. The two opposing bets aim to smooth the return path across different market conditions. The short book can be built in two ways. The first is simple hedging, where the fund pairs a holding with an offsetting position. It might buy a stock and hold an option against it to limit potential losses. This protects the portfolio, and hybrid mutual funds do it constantly to cushion against adverse moves. Historically, retail investors only had long-only mutual funds, where your only option to manage risk was either moving into cash or changing your asset allocation between equity and debt. On the extreme other end, you had AIFs with a ticket size of Rs 1 crore, which allowed complex strategies but were completely out of reach for most investors.” - Rajesh Bhatia, CIO - ITI AMC The second is

This article was originally published on July 20, 2026.