Hybrid SIFs take the lead, capturing over 80% of assets in India’s emerging SIF market: Report

Hybrid long-short strategies have emerged as the clear leader in India’s nascent Specialised Investment Fund (SIF) space, accounting for the overwhelming share of assets and investor flows, according to the latest Mutual Fund & SIF – Flow Meter (February 2026) report by ValueMetrics Technologies. As of January 31, 2026, hybrid SIF strategies control nearly 84% of total SIF assets under management (AUM) and over 83% of cumulative net inflows since October 2024, highlighting strong investor preference for diversified and risk-managed investment approaches.

SIFs are SEBI-regulated investment vehicles in India that sit between mutual funds and Portfolio Management Services (PMS). Targeted at experienced investors with a minimum investment of Rs 10 lakh, SIFs offer flexible, strategy-led, higher-risk portfolios across equity, debt, or hybrid strategies, with the ability to use derivatives, including naked short positions of up to 25%.

The total SIF AUM stands at around Rs 6,564 crore, of which hybrid long-short funds alone account for Rs 5,485 crore. These strategies also report a significantly higher average folio size of Rs 32.8 lakh, suggesting participation from relatively sophisticated investors such as high-net-worth individuals and family offices. In contrast, equity-oriented SIF strategies account for just 16% of total AUM, while debt-oriented and active asset allocator SIF categories have yet to see meaningful traction.

Equity SIF universe

Within the equity SIF universe, Equity Long-Short Funds continue to attract selective interest. Since October 2024, these strategies have received cumulative inflows of about ₹931 crore. However, monthly flows have been uneven, pointing to cautious and calibrated allocations rather than aggressive investor participation. Sector rotation long-short strategies and debt long-short SIFs remain largely dormant, reflecting limited investor appetite for more complex or narrowly focused strategies at this early stage of the SIF market’s evolution.

The dominance of hybrid SIFs mirrors a broader trend visible across the mutual fund industry, where investors are increasingly gravitating towards balanced and diversified products amid heightened market volatility and valuation concerns. Data for January 2026 shows that net inflows into active equity mutual funds moderated to Rs 24,029 crore, lower than the peaks seen during the middle of 2025. This slowdown suggests a degree of caution among investors, even as long-term confidence in equities remains intact.

Despite the moderation in monthly equity flows, growth-oriented categories continue to attract substantial money over longer time horizons. Over the past 12 months, Flexi Cap funds emerged as the largest beneficiaries, garnering net inflows of Rs 93,382 crore. Small Cap funds followed closely with Rs 59,931 crore, while Mid Cap funds received Rs 58,218 crore. The sustained interest in these segments indicates that investors are still willing to take exposure to higher-growth opportunities, albeit in a more measured manner.

Multi Asset Allocation Funds

Hybrid funds, particularly Multi Asset Allocation Funds (MAAFs), have been one of the standout performers. Over the last year, MAAFs recorded net inflows of Rs 60,117 crore, accounting for roughly one-third of total hybrid fund net flows. January 2026 alone saw net inflows of Rs 10,485 crore into this category. The strong demand reflects investor preference for portfolios that blend equity, debt, and alternative assets such as gold, offering better downside protection and smoother return profiles.

Another striking trend highlighted in the report is the sharp surge in Gold ETF inflows. In January 2026, net inflows into Gold ETFs jumped to Rs 24,040 crore, nearly matching the net inflows into active equity funds for the month. This convergence underscores a renewed investor focus on hedging and safe-haven assets amid global uncertainty, geopolitical risks, and concerns around stretched equity valuations.

SIP and retail investors

Retail participation through systematic investment plans (SIPs) continues to provide a strong structural backbone to the mutual fund industry. Monthly live SIP contributions rose to a record ₹31,002 crore in January 2026, while the number of outstanding SIP accounts crossed 1,029 lakh. Although the industry continues to witness SIP discontinuations and tenure completions, net additions remain positive, reinforcing the long-term commitment of retail investors to disciplined investing.

Overall, the report suggests that investor behaviour is undergoing a gradual shift. While equities remain a core component of portfolios, there is a clear and growing tilt towards hybrid, diversified, and risk-managed strategies. The dominance of hybrid SIFs, rising allocations to multi-asset funds, and strong Gold ETF inflows together point to a more balanced and cautious investment approach, even as participation in capital markets continues to deepen.