One year after the market regulator SEBI established norms, the Specialised Investment Funds (SIFs) are off to a slow and steady start amassing assets under management of ₹9,712 core and net inflow of ₹9,696 crore in last five months since the Association of Mutual Funds of India (AMFI) started tracking the data.
SIFs are sophisticated investment products which requires a minimum investment of ₹10 lakh and is strategically placed between mutual funds and AIFs. Unlike traditional MF schemes, SIFs can take unhedged or “naked” positions in derivatives up to 25 per cent of the portfolio to benefit from market crash.
The hybrid long-short fund has been the most popular with six schemes managing asset of ₹7,389 crore, while three equity long-short funds and two equity ex-top 100 long short funds have combined assets of ₹2,322 crore.
Debt-oriented strategy
Interestingly, none of the MF houses have launched a fund debt-oriented strategy, so far. The inflow numbers also indicate that fund houses are managing to attract investments only during the new fund offer stage. Currently, there are about 5,700 distributors who have passed the NISM to sell SIF as an investment option.
Though SEBI approved SIF norms last February, the need for a separate brand identity delayed its launch by MF houses.
As of March, 13 MF houses have received SEBI approval to launch SIFs with early movers including SBI MF (Magnum SIF), Edelweiss MF (Altiva SIF), Quant MF (qSIF), Aditya Birla Sun Life AMC (Apex SIF), ICICI MF (iSIF) and Bandhan MF (Arudha SIF).
Radhika Gupta, MD & CEO, Edelweiss Asset Management, said SIFs are growing at an expected pace and it will gain traction if the value proposition is made clear and delivered effectively.
The distribution of the product will continue to increase, as more MFD partners pass the required NISM XIII exam. The base has been built and the growth has been incredible in the first few months, she said.
New products
“We are planning to launch other products in the category as well, with more aggressive risk profiles, since Altiva’s first product, the Hybrid Long-Short fund, has been conservative. Our focus remains on giving consumers a good experience and building trust in the SIF brand,” said Gupta.
Bhautik Ambani, Associate Director & Chief Executive Officer, AlphaGrep, said in the current environment of elevated volatility and market dispersion, SIFs are structurally better placed to navigate uncertainty than traditional long-only funds.
However, investors need to evaluate each SIF carefully, as strategies can differ significantly, particularly in terms of derivatives usage and market beta, making manager approach and risk framework critical to outcomes, he said.