SIFs to Hit Rs 1 Lakh Crore by 2028, Show Strong Downside Protection

The report said that SIFs, a newly introduced investment structure in India, are witnessing early acceptance among investors and advisors who are looking for portfolio strategies that can manage downside risk more effectively amid rising market volatility.

It said, "India's SIF landscape could grow faster than Portfolio Management Services (PMS) did in its first five years".

According to the SIF 360 report, the SIF category has already crossed Rs 5,000 crore in assets under management (AUM) within a few months of launch. The early growth has been supported by increasing participation from asset management companies (AMCs) and growing awareness among investors.

A Specialised Investment Fund is positioned between traditional mutual funds, PMS, and alternative investment strategies. These funds are primarily designed for sophisticated and informed investors. Compared to conventional mutual fund schemes, SIFs offer greater flexibility in portfolio construction.

SIFs are allowed to use strategies such as long-short positioning, limited use of derivatives, dynamic asset allocation, and hedging techniques. The objective of these strategies is to manage portfolio risk across different market cycles, instead of depending only on market direction.

The report also highlighted how certain SIF strategies performed during periods of sharp market decline. As per data, Indian equity markets saw a broad-based correction on January 20, 2026. During this period, the Nifty 50 fell by 1.38 per cent, the Nifty 500 declined by 1.83 per cent, the Midcap 150 dropped by 2.48 per cent, and the Smallcap 250 fell by 2.68 per cent.

In comparison, several SIF strategies reported lower drawdowns. Diviniti SIF declined by 0.50 per cent, QSIF Equity fell by 1.24 per cent, while QSIF Equity Ex-Top 100 declined by 1.91 per cent.

This indicated a relatively lower downside impact compared to broader mid- and small-cap indices. Hybrid SIF strategies also showed limited declines, supported by a mix of equity exposure, debt instruments, and controlled hedging.

The report noted that seven AMCs have already launched SIF offerings, while several others are currently in the approval pipeline.

According to SIF360's estimates, the next phase of growth may emerge around 2027, with AUM potentially reaching Rs 60,000-70,000 crore before scaling further.

The report attributed the growing interest in SIFs to factors such as greater flexibility compared to traditional mutual funds, tax treatment different from Alternative Investment Funds (AIFs), the ability to manage risk through controlled exposure and hedging, and liquidity structures aligned with regulated fund frameworks.

The report concluded that as market volatility becomes more frequent, investors may increasingly assess portfolios not just on returns, but also on how well they preserve capital during periods of stress.

- ANI