On most days, derivatives and dinner conversations do not mix. Yet on a recent evening, a full house of investors turned up to hear four fund managers talk about something with a bureaucratic name but a very real promise: SIFs, or Specialised Investment Funds.
So, Value Research’s SIF Roundtable sat down with talking heads of qsif (by quant Mutual Fund), Altiva SIF (by Edelweiss Mutual Fund) and Diviti SIF (by ITI Mutual Fund) to understand this product better.
So, what on earth is an SIF?
For most investors, SIFs sit in an unfamiliar middle zone. They are more flexible than a mutual fund, yet more regulated and accessible than a PMS or hedge fund.
Put simply, for over 25 years, Indian investors have lived in a long-only world. More than 99% of mutual fund money has been deployed only in buy-and-hold positions. Shorting to protect the downside, or to profit from obvious excesses, was simply off the table.
SIFs aim to change that.
They allow managers to take positions on both sides of the market. Fund managers can pick quality companies and, at the same time, short weaker names or overheated sectors where they see euphoria building.
How does long–short work in your portfolio?
For investors used to SIP-ing in traditional long-only flexi-cap funds, long–short strategies can sound exotic. Sandeep Tandon, Founder and CIO of quant Mutual Fund, tried to disarm that fear with a simpler label: wealth protection products.
In a pure equity fund, if markets fall 30%, you feel most if not all of that pain. In an SIF, the toolkit is broader. Managers can lower portfolio volatility, manage beta more tightly, and use shorts not just for protection but also to generate alpha.
Tandon’s prescription is clear: do not treat SIFs as a replacement for mutual funds. Think of them as a complement. For investors with a five-year horizon, his thumb rule is simple half in mainstream mutual funds, half in SIF-style portfolios.
Where the real risk lies
Any product that uses derivatives deserves a health warning.
Gaurav Mehta, Head – SIF, Equity, SBI Mutual Fund, was quick to underline this. Long–short strategies can fail on both legs. You could buy stock A and see it fall, while shorting stock B and watching it rise.
Options add another layer of risk. They are non-linear instruments. Shorting options can produce small, steady gains, punctuated by large and sudden losses.
That is precisely why SEBI has imposed guardrails on SIFs:
Leverage is capped
Gross exposure cannot exceed 100% of assets
Unhedged shorts capped at 25%
Option-writing exposure fully counted toward limits
These rules aim to ensure SIFs remain controlled tools, not leveraged bets.
Four managers, four flavours
ITI Asset Management has launched an equity long–short strategy, extending experience from its long–short AIF. Jatinder Pal Singh, CEO of ITI AMC, sums it up: “Drawdown control first, alpha second.” Single-stock short limits of 1–4%, strict liquidity filters, and a willingness to sacrifice the last mile of return define the approach.
quant Mutual Fund has launched two SIFs. Tandon believes their edge lies in stock selection on both sides and spotting inflection points where valuations and behaviour diverge. Unlike long-only funds, the SIF book is tactical, shifting stance over quarters rather than years.
Edelweiss Mutual Fund, represented by Bhavesh Jain, has taken a hybrid route. Its Altiva SIF Hybrid Long Short builds on experience in arbitrage and balanced strategies, layering derivative structures to enhance returns while keeping volatility low.
SBI Mutual Fund has chosen a multi-asset SIF. The idea is to bridge the gap between low-yield arbitrage funds and higher-volatility hybrids. About one-third of returns are expected from steady income assets, with the rest from hedged equity and option premium. The goal: mid single-digit drawdowns with returns that beat arbitrage, without behaving like pure equity.
So, is this for you?
The closing round stripped away the hype.
ITI sees SIFs for aggressive investors wanting to soften drawdowns, or conservative ones seeking balanced upside
quant positions them for investors seeking stable returns with lower volatility, not “ballistic” gains
Edelweiss targets the low-risk bucket, aiming for arbitrage-like stability plus incremental return
SBI focuses on investors seeking a low-variability way to beat inflation
Across the board, the message was consistent: SIFs are not a magic upgrade to mutual funds. They are specialised tools. Used well, they can improve a portfolio’s risk–reward profile. Used poorly or misunderstood they can add complexity without benefit.