What should I actually check before choosing an SIF?

Published 19 September 2026

Chandra from Bangalore

There are now multiple SIF categories and strategies. Instead of looking at recent performance, what questions should I ask before selecting one?

Sachin Kabra Co-founder Foliyo (SEBI RIA No: INA000023454), ex-Director HDFC Private Wealth, Business Head Motilal Oswal AMC LinkedIn

Start by asking what the fund is replacing in your existing portfolio.

Is it replacing debt, arbitrage or equity savings? Is it competing with your flexi-cap fund? Or are you using it as a higher-risk satellite allocation?

Then ask what the normal net equity exposure and short exposure may be, rather than looking only at the permitted allocation range.

You should also understand where the returns are expected to come from: long equity, debt, arbitrage, covered calls, IPOs, special situations or tactical asset allocation.

Then ask what can go wrong. Could the long and short books both lose money? Is there credit risk? Is there liquidity risk? Can an allocation model remain wrong for a long period?

Finally, check how quickly you can exit, along with TER, brokerage, exit load and tax implications.

The more complicated the return engines, the more important it becomes to understand the fund-management process.

“The first question is: what is this fund replacing?”

“The more return engines the fund has, the more important it becomes to understand the fund-management process.”

This answer is derived from Sachin Kabra’s video on Specialized Investment Funds.

This is not personalized investment advice. Your portfolio, goals, liquidity needs and risk tolerance may be different, so assess your own situation and discuss it with your financial advisor.

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Does a long-short SIF protect me if the market crashes?

Since long-short SIFs can short stocks, does that mean they have built-in downside protection and cannot lose as much as a normal equity fund?

Manpreet from Chandigarh

If two SIFs are in the same category, why can their returns be completely different?

I saw one SIF deliver more than 15% while another lost more than 5% over roughly the same period. If both are called SIFs, why is there such a large difference?

Tushar from Bangalore

Are SIFs actually better than mutual funds, or are they just a new product category?

SIFs seem to offer more flexibility, long-short strategies and more complex portfolio construction. Does that automatically make them better than regular mutual funds?

Mohita from Varanashi

If equity has the highest long-term return, why should I hold debt or gold at all?

If I have a 15–20 year investment horizon, wouldn’t I be better off putting everything into equity? What is the point of holding lower-return assets like debt or gold?