Wealthy Flock to New Hybrid SIFs for Better Returns

Affluent investors are increasingly turning to newly launched hybrid specialised investment funds (SIFs) for their tax efficiency and improved returns over traditional fixed-income products.

By May 2026, SIFs had accumulated ₹13,814 crore in assets since their September 2025 launch, with hybrid strategies accounting for ₹9,990 crore (72%). These funds typically require a minimum investment of ₹10 lakh and combine debt, equity, and derivatives.

The primary appeal lies in their tax structure; hybrid SIFs qualify for equity taxation, meaning a 12.5% long-term capital gains tax after one year. This is significantly lower than the typical 30% slab rate for wealthy investors on income from traditional deposits or pure debt funds.

Hybrid strategies within SIFs offer an average folio size of ₹33.9 lakh and have delivered approximately 5.3% over the preceding three months. They typically invest across fixed-income instruments, arbitrage, covered calls, special situations, and a small allocation to long-short or options-based strategies, aiming for 8-10% returns with low volatility.

Industry officials note that the category is new, with less than a year's track record, and involves active use of derivatives, which warrants caution. However, some investors see these strategies as a way to generate regular retirement income.