Specialised investment funds: India’s regulated investment market had a clear price gap. Portfolio Management Services require at least ₹50 lakh, while Alternative Investment Funds generally begin at ₹1 crore. Mutual funds permit much smaller investments but operate within tighter portfolio rules. Within this ladder, investors with ₹10 lakh to a few crore to deploy had no product designed around the middle tier.
These investors do not necessarily need a bespoke portfolio. They may, however, want strategies that a conventional mutual fund cannot run, without the higher entry threshold and commitment associated with PMS or AIF products. SEBI designed Specialised Investment Funds for this market.
READ | PSU disinvestment no substitute for reform
Specialised Investment Funds create a middle tier
SEBI issued the SIF framework on February 27, 2025, and brought it into force from April 1. The minimum investment is ₹10 lakh, calculated at the PAN level across the strategies offered by a single SIF.
A mutual fund can qualify through either of two routes. The first requires at least three years of operations and average assets of ₹10,000 crore during that period. The alternative route requires an experienced SIF chief investment officer and an additional fund manager. Both routes include conditions on regulatory action against the sponsor or asset management company.
The main distinction lies in what fund managers can do. SIFs may take unhedged short exposure of up to 25% of net assets through exchange-traded derivatives. SEBI permits equity long-short, sector-rotation, debt long-short, active asset-allocation and hybrid long-short strategies.
SIFs can also be open-ended, closed-ended or interval products. Some strategies allow redemption only on specified days. The additional investment freedom therefore comes with portfolio and liquidity risks that do not arise in the same form in most conventional mutual funds.
The US interval-fund market offers a useful, though imperfect, comparison. Its assets rose from $39 billion at the end of 2020 to $131 billion at the end of 2025. Most of these funds hold less liquid assets: credit-focused strategies accounted for 64% of interval-fund assets in 2025. Indian SIFs have so far been built mainly around listed securities and derivatives. The comparison shows demand for regulated products between daily-liquidity funds and private investment vehicles, rather than a common portfolio model.
READ | Chinese investment returns to India through a narrow opening
Specialised Investment Funds draw early money
India’s first four SIF strategies were launched in October 2025 with combined assets of ₹2,010 crore. Assets rose to ₹10,620 crore by March 2026 and ₹13,814 crore by the end of May, an increase of about 30% in two months. Hybrid strategies held 72% of the category’s assets in May.
Edelweiss Altiva and SBI Magnum have taken the lead. The Altiva Hybrid Long-Short Fund had assets of ₹4,507 crore at the end of May. The Magnum Hybrid Long Short Fund had ₹3,455 crore. Together, the two funds accounted for close to 58% of SIF assets.
The category has found buyers faster than its short operating history would suggest. Hybrid long-short funds have attracted most of the money because they combine debt, arbitrage and equity exposure while using derivatives to limit or profit from selected market risks.
READ | Disinvestment: Capital recycling is an untapped fiscal lever
Early SIF returns need a longer record
Early returns have supported the inflows. In the direct plan of the Altiva Hybrid Long-Short Fund, ₹10,000 invested at inception was worth ₹10,665 on May 31. The corresponding benchmark value had fallen to ₹9,560.
The direct plan of the Magnum Hybrid Long Short Fund had turned ₹10,000 into ₹10,291 by the same date, while its benchmark value stood at ₹9,562. Both funds began operations on October 20, 2025.
These numbers are encouraging, but seven months is too short to establish durable outperformance. Long-short strategies should be judged across rising and falling markets. Comparisons with balanced advantage funds are also weak because the portfolio rules, derivative exposure and costs differ.
SEBI has filled a genuine gap in the investment market, and the early asset growth confirms demand. SIF managers must now show that their additional freedom improves outcomes after costs across a full market cycle.
Investors will need to examine the actual short exposure, total expense ratio and redemption calendar of each strategy. The ₹10 lakh floor screens only for ticket size.
Avinash Ghalke is a Professor of Finance at the S.P. Jain Institute of Management & Research (SPJIMR), Mumbai, and Muneeb Shaikh is a student at SPIT, Mumbai.