Specialised Investment Funds (SIFs) are demonstrating strong appeal beyond India's major metropolitan areas, with 53% of investors coming from beyond the top 30 cities, according to an analysis by Computer Age Management Services (CAMS). These regions account for roughly 33% of total SIF assets, significantly outpacing their contribution of 18.9% to overall mutual fund assets as per the Association of Mutual Funds of India (Amfi). The data covers CAMS-serviced asset management companies representing nearly 60% of SIF assets, with SIFs managing ₹10,620 crore in assets across 11 schemes serving 28,754 investors as of March-end.
The early traction appears tied to distributors framing hybrid long-short strategies as relatively conservative options offering slightly higher returns than fixed-coupon products. According to SBI Mutual Fund's joint chief executive DP Singh, hybrid funds are being pitched as conservative products with different classes of investors based on their risk appetite, aimed at investors who can stay invested for 2-3 years and expect fixed-coupon type returns. Hybrid strategies account for about 75% of total SIF assets under management as of February-end, with five of the six hybrid long-short funds falling in the low-risk category.
Hybrid SIFs have demonstrated strong downside protection capabilities, with the Quant QSIF hybrid long-short fund returning 2.39% in the last three months while SBI's Magnum hybrid long-short fund fell 0.93% and Edelweiss Altiva hybrid long-short fund gained 1.2%, according to Value Research data. This compares favorably to the Nifty 50's decline of 5.76% over the same period. The positioning as relatively conservative options that cushion volatility while delivering 2-3% returns even in falling markets has been key to their appeal to investors in tier-3 cities and beyond.
The distribution pattern shows 56% of regular SIF assets coming from individual mutual fund distributors, with registered investment advisers accounting for about 14% and national distributors and public-sector banks contributing 13% each, according to CAMS data. The number of SIF-certified distributors has risen from about 4,800 in January to around 6,200 in March. Additionally, nearly 30% of SIF investors are in the above-60 age bracket, reflecting the tilt towards conservative positioning in investor demographics.
SIFs, introduced by the Securities and Exchange Board of India (Sebi) in February 2025 with a minimum ticket size of ₹10 lakh, were positioned for investors with higher risk appetite than mutual funds. Despite the strong performance in smaller cities, SIFs managed only ₹10,620 crore in assets compared to India's mutual fund industry's ₹73.73 trillion in assets under management. The increased inflows from B30 cities may reflect the role of large bank distributors and their branch networks, with distributors able to effectively explain portfolio hedging needs during periods of market volatility.
