Hybrid specialised investment funds pulled in ₹9,709 crore, 70% of the entire SIF category’s total assets under management of ₹13,814 crore as of May 31, 2026, driven by wealthy investors seeking equity-level tax rates at lower portfolio volatility, ValueMetrics Technologies data showed Thursday.
Monthly inflows into the category rose to ₹1,396 crore in May, up 15% from ₹1,219 crore in April. Hybrid long-short strategies specifically pulled in ₹707 crore for the month, 8% higher than April, and have now attracted ₹9,526 crore in cumulative inflows since October 2024, the highest of any SIF sub-strategy.
“We are largely seeing evolved mutual fund investors and HNIs, particularly those with prior experience investing in AIFs, participating in our hybrid strategy,” said Radhika Gupta, MD and CEO, Edelweiss Asset Management.
Why the Tax Angle Is the Real Story
The folio data makes the investor profile unmistakable. Average ticket size for hybrid SIF investors stands at ₹33.9 lakh, versus ₹14.1 lakh for equity-oriented SIFs and ₹24.3 lakh across the category overall. This is family-office and HNI capital, deliberate, large, and tax-motivated.
The arithmetic is straightforward. Most hybrid SIFs, once held beyond 24 months, qualify for 12.5% long-term capital gains tax.
Pure debt funds and bank fixed deposits are taxed at slab rates, typically 30% for investors in the highest bracket. That 17.5-percentage-point gap on post-tax returns is the product’s core pitch, not its performance.
| Product | Expected Pre-Tax Return | Tax Rate (HNI) | Approx. Post-Tax Return |
|---|---|---|---|
| Bank FD | 7.0–7.5% | 30% slab | ~5.0–5.3% |
| Debt Mutual Fund | 7.5–8.0% | 30% slab | ~5.3–5.6% |
| Conservative Hybrid SIF | 8–10% | 12.5% LTCG | ~7.0–8.75% |
| PMS (Equity) | 12–15% | 12.5% LTCG | ~10.5–13.1% |
Estimates based on industry projections. Not guaranteed. Consult a SEBI-registered adviser before investing.
“Investors can expect an 8–10% return from conservative hybrid SIFs, with equity taxation and low volatility,” said Sandeep Seth, CEO and founder, SIF360.com.
Also Check: FD Calculator – Fixed Deposit Interest rate calculator india
Equity Strategies Are Catching Up
Hybrid strategies dominating 70% of SIF AUM is the headline, but the undercurrent in May data is the equity-oriented segment. It received ₹652 crore in May, a 36% jump from ₹478 crore in April. That’s a sharper monthly acceleration than hybrids recorded.
Some HNI appetite is rotating toward higher-risk strategies, likely as markets have recovered from the late-2025 correction that hit mid and small caps hardest.
During that correction, every equity long-short SIF had gone negative since launch, while most hybrid SIFs held flat or posted modest gains.
That divergence almost certainly explains why the ₹33.9 lakh HNI ticket went into hybrid rather than equity long-short.
Performance under stress sorted investors by risk appetite, the large-ticket money chose the defensive structure.
| Strategy | AUM May 2026 | Share | May Inflow | MoM Change |
|---|---|---|---|---|
| Hybrid Long-Short | ₹9,709 Cr | 70% | ₹707 Cr | +8% |
| Equity-Oriented | ₹3,843 Cr | 28% | ₹652 Cr | +36% |
| Others | ₹262 Cr | 2% | ₹37 Cr | — |
| Total SIF | ₹13,814 Cr | 100% | ₹1,396 Cr | +15% |
Source: ValueMetrics Technologies, May 31, 2026
The Migration Risk Nobody Is Talking About
Manuj Jain, co-founder of ValueMetrics, flagged a less-obvious growth driver: potential migration from income-plus arbitrage fund-of-funds.
Investors in that category already chase tax efficiency, and as hybrid SIFs build a track record, some of that capital may see the 12.5% LTCG structure as a superior alternative.
If even a single-digit percentage of India’s arbitrage FoF assets shifts toward SIFs, the AUM implications for this nine-month-old category are significant.
New entrants are arriving fast. Kotak Mahindra Mutual Fund ran its Infinity Hybrid Long-Short Fund NFO from June 15–29, 2026.
HSBC entered the space with its RedHex Hybrid Long-Short Fund NFO in early June. Across platforms, 28 SIFs are now being tracked.
Category Growth: Oct 2025 to May 2026
| Month | Total SIF AUM | Monthly Inflow |
|---|---|---|
| October 2025 | ₹2,010 Cr | — |
| January 2026 | ₹6,564 Cr | ₹1,729 Cr |
| February 2026 | ₹9,711 Cr | ₹3,127 Cr |
| April 2026 | ~₹12,300 Cr | ₹1,219 Cr |
| May 2026 | ₹13,814 Cr | ₹1,396 Cr |
Source: ValueMetrics Technologies / AMFI
The Caveat the Industry Keeps Repeating
Mutual fund industry officials caution that the oldest hybrid SIF is less than a year old, portfolio disclosures are bi-monthly rather than monthly; and derivatives usage means complexity that requires fund manager conviction, not just regulatory headroom.
SEBI caps short exposure at 25% of net assets, but sets no floor, meaning a fund can technically run zero short positions while operating under the long-short label.
The first LTCG clock expires for early investors in October 2026, 24 months after the first hybrid SIFs launched.
That is the real performance reckoning. Until then, the ₹13,814 crore AUM tells you what investors are betting on. Whether fund managers deliver is a question the data doesn’t answer yet.
Read Next: Aditya Birla Taps SBI, Axis for ₹15,000 Crore to Buy Sprng Energy
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
