Specialised investment funds, a new category launched by the Securities and Exchange Board of India (Sebi), are designed to allow investors to gain exposure to long-short strategies, which are not available in the mutual fund space. The minimum investment is ₹10 lakh.
Of the 25 SIFs launched to date, 12 are hybrid, with Jio Blackrocks’ Prism Hybrid Long-Short Fund being the latest, according to data from SIF360.com.
The bulk of the money is allocated to hybrid long-short strategies, with assets under management of ₹9,709 crore, accounting for around 70% of the total SIF AUM of ₹13,814 crore as of 31 May 2026.
The selling point
Hybrid long-short SIFs have delivered around 5.5% on average over the past three months (as of 25 June 2026), according to data from SIF360.com, a period marked by heavy market volatility due to the West Asia war-led rise in oil prices and global uncertainty.
“Since the launch of SIFs, markets have largely been negative and volatile. As a result, most other categories launched in SIF strategies have underperformed. In contrast, hybrid SIFs, with their relatively conservative approach, have navigated this period more effectively and consequently delivered better returns,” said Bhavesh Jain, president and co-head, factor investing, Edelweiss Mutual Fund.
First SIFs were launched in September 2025.
Hybrid SIFs investors pay a 12.5% long-term capital gains tax after one year. In contrast, income or gains from traditional deposits or pure debt funds are taxed at slab rates, regardless of holding period.
Hybrid strategies invest across arbitrage opportunities, fixed-income instruments, covered calls, options-based strategies, special situations such as open offers and buybacks, and a smaller allocation to short positions.
“Hybrid long-short strategies can vary significantly across schemes but primarily focus on delivering better risk-adjusted and post-tax returns compared to traditional fixed-income options like fixed deposits and bonds," said Anup Bhaiya, founder, Money Honey Wealth Services.
"By blending fixed income, real estate investment trusts, infrastructure investment trusts, and arbitrage opportunities, they can offer attractive tax-efficient returns, which is making them popular among high-net-worth investors,” he added.
An alternative option
“Investors are using hybrid long-short SIFs as a replacement for bonds and arbitrage funds. Arbitrage funds took a hit on returns due to a hike in securities transaction tax. Debt funds, too, lost their tax advantage, as all gains were subjected to the investor's slab rate. In a hybrid SIF, an investor can expect reasonable risk-adjusted returns. That is the reason investors are taking interest,” said Sandeep Seth, founder and chief executive, SIF360.com.
However, he added that investors need to be careful when picking hybrid SIFs, as the schemes vary in their moderate, conservative and aggressive composition.
Investors who have yet to invest in SIFs can let hybrid SIFs build a track record before considering them for their portfolios.