Edelweiss Mutual Fund chief Radhika Gupta explained SIFs or Specialised Investment Funds to her followers on social media, and shared her thoughts on the investment category, to aid common investors considering dipping their toes in the sector.

The musing came as Edelweiss opens its first SIF, the Altiva Hybrid Long Short today, on October 1, 2025. We take a look at the key highlights that Radhika Gupta addressed.

Radhika Gupta on expected returns in SIFs

The first observation from the markets doyen was the key investor question, “Kitna milega?” Her answer? It depends.

“I’ve seen a lot of investors ask what return a SIF can deliver. The answer is it depends on the category and on the product within the category. There is no standard answer,” she noted.

She also pointed out a key difference between SIFs and mutual funds (MF), is that the latter is “more homogenous in a single category” (e.g. large cap), but for SIFs, “even in a single category funds will be very different”.

She cautioned investors to study their portfolios for risk-return ratio, and not blindly label funds based on returns: “Equity Long Short can have a 75-25 long short fund and a 25-25 long short fund. Both have very different risk return profiles – make your comparisons nuanced. Please don’t sort funds on returns!”

SIFs can lower market exposure and risk?

According to Radhika Gupta, SIFs are flexible and allow for products that lower market exposure and risk, and deliver better risk adjusted return.

“Fundamentally the core flexibility in SIF is derivative usage beyond hedging which was allowed in MF. This lends itself to products that lower market exposure and risk, and deliver better risk adjusted return. Think from this lens when buying a SIF, rather than just a pursuit of higher returns. Many SIF categories will be built this way,” she noted.

How much should you allocate to SIFs?

According to Radhika Gupta, SIFs should be viewed as a “solution” and not an asset class, where your allocation should be need based. She said, “Don’t think how much you need to allocate to SIF. Ask what the SIF solves for and whether you need it.”

She observed that Edelweiss’ SIF is a tax efficient income solution, where, “If you have debt or income as part of your asset allocation it fits. But if you have only growth assets it doesn’t at all.”

What are the benefits of SIF for me?

According to the investment expert, the “best part” about SIFs, is that it offers the tax benefits of mutual funds, plus comparatively more flexibility. “My view is that the best part of SIF is the tax efficiency, structure and transparency of MF with a little more alternative like flexibility. Always look at post tax returns when you compare to PMS and AIF, that matters,” she added.

‘Use financial tools sensibly’

Radhika Gupta noted that allocation to various investment tools must be scrutinised for what need they address for each investor individually. She added that for when used “sensibly and by the right people”, often demonised derivatives are “can do good things”.

“The market has a lot of narratives including derivatives being bad. Don’t believe them. Derivatives are financial tools that can do good things when used sensibly and by the right people. For instance arb funds (arbitrage funds) already use derivatives to good use. SIF doesn’t allow leverage as a structure — exposure is capped at 100 per cent,” she stated.

What data should you use to evaluate an SIF?

On what data investors must ask in order for you to evaluate an SIF, Radhika Gupta suggested the following list: time horizon, rolling returns over 1-2 years, rolling returns including worse case outcome in 1 month, 3 month, standard deviation, open market exposure. “This will give you a sense of the kind of experience you may have,” she shared.

‘SIF is new, consult with AMC, understand it before investing’

Her last two pointers focused on investor safety and due diligence — a common sense aspect that could get overruled by hype and FOMO.

“SIF requires a different capability than buy and hold investing. Ask your AMC this question. A lot of people are asking about short capabilities of Indian managers — remember shorting can be done in different ways. Fundamental shorts, tactical shorts, hedged derivative strategies are all options,” she said.

Adding, “This is a new asset class that will evolve. Understand it, and invest only when you understand it. Please do take the help of good advisors and MFDs who can assist you in decoding these funds. Happy SIFing.”