As markets grow increasingly volatile, specialised investment funds (SIFs) are emerging as an alternative to traditional long-only equity funds. According to reports from Mint, these funds offer a more adaptive framework by combining long and short positions within a single portfolio. The shift comes as investors seek solutions that can participate meaningfully in bull markets while potentially mitigating risk during downturns. While long-only funds remain effective vehicles for passive wealth creation, SIFs provide a more evolved solution for a world characterized by frequent volatility spikes, global capital flows, and rapid sectoral shifts.
A key objective of SIFs is to enhance risk-adjusted returns by lowering portfolio beta and volatility. As reported by Mint, SIFs operate with lower net market exposure compared to long-only funds, which may reduce sensitivity to market swings. The defining advantage lies in their flexible net exposure capability. During bullish phases when earnings momentum is strong, SIFs may operate with high net long bias, behaving much like traditional equity funds. However, during volatile or bearish periods, SIFs can reduce net exposure or move net short using a calibrated mix of longs and shorts, potentially avoiding sharp drawdowns that are often underestimated drivers of long-term underperformance in long-only portfolios.
Within just six months of their debut, SIFs have already amassed over ₹10,620 crore in assets, drawing in thousands of investors and prompting a rush of new launches from large fund houses. As of March 2026, SIF products held ₹10,620 crore in assets under management (AUM) across 14 strategies tracked across 11 asset management companies, according to The Hindu BusinessLine. The growth trajectory has been particularly impressive, with SIF AUM more than doubling to ₹10,620 crore in March from ₹4,892 crore in December 2025, and further rising to over ₹9,711 crore by February 2026. This rapid capital accumulation suggests that SIFs are effectively bridging the gap between traditional mutual funds and more exclusive Portfolio Management Services (PMS), offering greater flexibility with a minimum investment of ₹10 lakh.
As SIFs continue to gain traction, Asset Management Companies (AMCs) are implementing SEBI's voluntary lock-in facility to strengthen investor protection. According to Upstox, Franklin Templeton Asset Management has rolled out the facility across both demat and non-demat folios effective May 1, 2026, ensuring no units can be debited without explicit unlocking. LIC Mutual Fund enabled the facility from April 30, 2026 via the MF Central platform for non-dematerialised folios, while PGIM India Mutual Fund and JM Financial Asset Management have introduced similar provisions. ICICI Prudential Asset Management confirmed the facility will be available for both demat and Statement of Account holdings, aimed at improving digital security and preventing unauthorised redemptions. The initiative represents a significant step toward strengthening investor protection and reducing risks related to fraud or unauthorised access.
While the ₹10,620 crore milestone reflects genuine investor appetite, distribution readiness presents significant challenges. As reported by Mint, only 6,200 distributors have cleared the NISM's 150-mark test covering derivative market basics, trading strategies, risk management, and regulations, creating a certification gap that industry experts identify as the most urgent challenge. The exam includes negative marking, with 1 mark deducted for every 4 wrong answers, and covers currency derivatives which are rarely used in SIF strategies. The minimum investment of ₹10 lakh is set at the fund house level, creating opportunities for large mutual fund houses to cross-sell to existing investors, with some fund houses allowing investors to invest up to ₹50,000 in subsequent offerings from the same house. However, only 6,000 distributors have cleared the NISM's 150-mark test covering derivative market basics, trading strategies, risk management, and regulations, creating a certification gap that industry experts identify as the most urgent challenge.
