Key Takeaways
- • SIF assets reached Rs. 35,000 crore across 34 schemes by September-end, up 22.8% from August, with monthly net inflows of Rs. 7,578 crore and folios at 1.56 lakh, according to Cafemutual.
- • Hybrid SIFs captured Rs. 5,174 crore of September inflows, with Hybrid Long-Short Funds alone attracting Rs. 4,486 crore, as investors seek alternatives to arbitrage and equity savings funds.
- • Equity long-short strategies are gaining traction, with Ex-Top 100 Long-Short Funds collecting Rs. 1,492 crore and Equity Long-Short Funds Rs. 895 crore in September, though distributors remain cautious due to a lack of track record.
- • Distributor participation remains early-stage, with roughly 10,000 distributors holding the SIF qualification versus more than three lakh mutual fund distributors, according to inXits CEO Samir Vora.
- • Distributors cite the need for a longer performance record, SIP/STP/SWP facilities, and short-selling expertise before broader adoption, with Rao noting that 36 months of performance will be key.
Summary
Specialised Investment Funds (SIFs) are attracting growing interest across investment strategies, with 34 schemes managing Rs. 35,000 crore by September-end, up 22.8% from August. Monthly net inflows reached Rs. 7,578 crore, and the number of folios rose to 1.56 lakh, according to Cafemutual's review of distributor views.
Hybrid strategies continue to dominate. Of the September inflows, Rs. 5,174 crore went into hybrid-oriented SIFs. Killol Ringwala, Managing Partner at Safe Assets, said much of this demand comes from investors seeking alternatives to arbitrage and equity savings funds, with the clearest trend being money flowing into Hybrid SIFs positioned as alternatives to Arbitrage Plus and Equity Savings Funds. He noted that investors want equity-linked strategies offering better risk-adjusted returns with lower volatility, though he believes the preference could shift if equity markets regain momentum.
Equity strategies are also attracting capital. In September, Equity Long-Short Funds received Rs. 895 crore, Ex-Top 100 Long-Short Funds collected Rs. 1,492 crore, and Active Asset Allocator Long-Short Funds attracted Rs. 688 crore. Sudhendra Rao, Co-Founder and Product Head at MFnxt, views the Ex-Top 100 category as particularly interesting for its exposure to companies outside the largest 100 stocks. He cautioned, however, that managing short positions will be crucial, since mid and small-cap stocks have few F&O listings available for hedging. Rao said some SIFs have beaten benchmarks, but distributors are still assessing whether fund houses can manage shorts consistently, with limited track record a key concern.
Distribution remains at an early stage. Samir Vora, CEO at inXits, estimated around 10,000 distributors hold the relevant SIF qualification, compared with more than three lakh mutual fund distributors. Rao said several SIF offerings still lack SIP, STP and SWP facilities, which could limit their use in long-term portfolios, and that he is introducing SIFs largely through fresh investments rather than shifting existing mutual fund holdings. Rao and Vora pointed to taxation and limited expertise in debt long-short strategies as possible reasons for the absence of debt-oriented SIFs.
Looking ahead, Vora expects rapid growth as more distributors enter and awareness improves. Ringwala sees equity strategies as the next potential shift if market conditions turn favourable. Rao emphasised that a longer performance record will be decisive, stating that it is difficult to judge until 36 months of performance are available. Distributors will be watching how these funds perform when markets are difficult and short positions are tested.
Hybrid strategies continue to dominate. Of the September inflows, Rs. 5,174 crore went into hybrid-oriented SIFs. Killol Ringwala, Managing Partner at Safe Assets, said much of this demand comes from investors seeking alternatives to arbitrage and equity savings funds, with the clearest trend being money flowing into Hybrid SIFs positioned as alternatives to Arbitrage Plus and Equity Savings Funds. He noted that investors want equity-linked strategies offering better risk-adjusted returns with lower volatility, though he believes the preference could shift if equity markets regain momentum.
Equity strategies are also attracting capital. In September, Equity Long-Short Funds received Rs. 895 crore, Ex-Top 100 Long-Short Funds collected Rs. 1,492 crore, and Active Asset Allocator Long-Short Funds attracted Rs. 688 crore. Sudhendra Rao, Co-Founder and Product Head at MFnxt, views the Ex-Top 100 category as particularly interesting for its exposure to companies outside the largest 100 stocks. He cautioned, however, that managing short positions will be crucial, since mid and small-cap stocks have few F&O listings available for hedging. Rao said some SIFs have beaten benchmarks, but distributors are still assessing whether fund houses can manage shorts consistently, with limited track record a key concern.
Distribution remains at an early stage. Samir Vora, CEO at inXits, estimated around 10,000 distributors hold the relevant SIF qualification, compared with more than three lakh mutual fund distributors. Rao said several SIF offerings still lack SIP, STP and SWP facilities, which could limit their use in long-term portfolios, and that he is introducing SIFs largely through fresh investments rather than shifting existing mutual fund holdings. Rao and Vora pointed to taxation and limited expertise in debt long-short strategies as possible reasons for the absence of debt-oriented SIFs.
Looking ahead, Vora expects rapid growth as more distributors enter and awareness improves. Ringwala sees equity strategies as the next potential shift if market conditions turn favourable. Rao emphasised that a longer performance record will be decisive, stating that it is difficult to judge until 36 months of performance are available. Distributors will be watching how these funds perform when markets are difficult and short positions are tested.
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