Why Radhika Gupta Calls SIFs The Sweet Spot Between MFs And AIFs

We all love our food, so here's a relatable example. Imagine your portfolio as a buffet. Mutual funds are the comforting dal-chawal: nutritious, reliable, and suited for daily consumption. Alternate Investment Funds are more like caviar: niche, complex, and not for everyone. And now, say hello to the newest dish on the menu: Specialised Investment Funds or SIFs, a balanced blend of accessibility and complexity that might just hit the perfect investing flavour.

That instinct to simplify the complex, and do it without dumbing it down, is at the heart of why Edelweiss MF's Radhika Gupta believes SIFs might just be the product India didn't know it needed.

SIFs are being pitched as the financial Goldilocks zone: more flexible than mutual funds (MFs), but more accessible and tax-efficient than Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs).

"There was a house called mutual fund... it catered to very basic needs," Gupta explains. "And then there were two other houses, AIFs and PMS, which had more flexibility but higher entry barriers. What you get with SIF is the best of both worlds."

So, What Is A SIF, Really?

SIFs are a new category of pooled investment vehicles approved by SEBI in 2024, with the first wave of filings and brand launches kicking off in 2025. The Edelweiss Altiva SIF, for instance, requires a minimum investment of Rs 10 lakh, placing it neatly between MFs (Rs 500 upwards) and AIFs (Rs 1 crore minimum).

That Rs 10 lakh ticket size is strategic. "When you talk to someone who's giving you Rs 1 crore, that's someone with a Rs 10 crore net worth," Gupta says. "When you talk to someone who's giving you Rs 10 lakh, you're talking to someone with a Rs 1 crore net worth. That's an exponentially larger population."

Flexibility, Minus The Chaos

So, what do SIFs allow that MFs don't? Three big things:

• Use of derivatives for taking negative views (short selling)

• More aggressive credit exposure in debt investments

• No daily redemption pressure

For example, in the equity long-short category, a fund manager could build a portfolio that's 75% long on manufacturing and IT stocks and 25% short on financials. That's not something a traditional MF structure would permit. "In mutual funds, you can't use derivatives to take negative views," Gupta points out. "You can hedge, but you can't profit from a fall."

Why 'Altiva' Started With Hybrid

Gupta reveals that Edelweiss's first SIF product, under Altiva, is filed in the hybrid category. "One of the needs of the Indian consumer is tax-efficient fixed income-like solutions," she says, especially after the taxation rules for traditional fixed income MFs changed.

"If I were to do a hybrid long-short product on the AIF platform, the consumer would be paying 40% at marginal tax rate to generate maybe 8% post-tax returns," Gupta explains. "That platform needs to deliver a 15-16% return. SIF needs to deliver 11-12%."

In contrast, SIFs follow the same tax treatment as mutual funds: capital gains tax, not marginal slab rates, and no tax on churn within the fund. This makes them far more efficient for active strategies.

Risk, With Nuance

If there's one theme Gupta circles back to, it's the idea that India needs to grow more sophisticated in understanding risk.

Unlike mutual funds, where equity and hybrid categories tend to follow tightly defined mandates, SIFs allow fund managers to craft portfolios with varying market exposure and return profiles. It's a product for a more aware investor, or, at the very least, one who has access to a trusted advisor.

As SIF products get rolled out in the coming months (pending SEBI approvals), the big question is whether investors will bite. But for now, investors should see SIFs not as replacements for mutual funds, but as additions. "70–80% of your dal-chawal still belongs in mutual funds,” Gupta says. “But for the rest? SIFs may be where the biryani is."