Summary of this article
Family offices and UHNIs are driving early adoption of SIFs
Tax efficiency and lower costs make SIFs attractive over AIFs
HNIs are expected to fuel the next phase of SIF growth
Family offices and ultra-high-net-worth individuals (UHNIs) are emerging as the earliest adopters of Specialised Investment Funds (SIFs), with high-net-worth individuals (HNIs) likely to be the next major investor segment, according to Rishi Kohli, Managing Director and Chief Investment Officer of Jio BlackRock Asset Management.
Speaking to Outlook Money on the sidelines of the sixth edition of the Indian Institutional Quant Conference (IIQC), Kohli said investors who have traditionally allocated capital to Category III Alternative Investment Funds (AIFs) are increasingly evaluating SIFs because they offer similar investment strategies with lower costs and better tax efficiency.
"Family offices and UHNIs understand absolute return strategies because they have invested in Category III AIFs for years. But SIFs change the economics," Kohli said.
According to him, the biggest attraction is the improvement in post-tax returns. While many absolute return AIFs target gross returns of around 14 per cent, investors often end up with nearly half that after accounting for management fees and taxes.
"In an AIF, you may generate 14 per cent gross but eventually take home only around 7 per cent. A SIF doesn't need to generate that much. Even if it delivers 10-11 per cent, investors can end up with superior net returns because of the mutual fund taxation structure," he said.
Unlike Portfolio Management Services (PMS), where investors own securities directly and every trade can trigger a tax liability, SIFs are structured under the mutual fund framework. Portfolio churn inside the fund does not create a tax event for investors. Capital gains tax is payable only when investors redeem their units, allowing returns to compound without annual tax leakage.
Kohli believes this could drive wider adoption beyond institutional investors.
"If you are an HNI with Rs 10 lakh to invest and you hear that ultra-HNIs are already using these strategies, you will naturally want to participate as well," he said.
Association of Mutual Funds in India (Amfi) data showed that the assets under management (AUM) of SIFs stood at Rs 17,858 crore, as of June 30,2026, rising 29.3 per cent month-on-month from Rs 13,814 crore in May. Net inflows stood at Rs 3,782 crore during the month, driven largely by hybrid strategies, which attracted Rs 2,685 crore, while equity strategies garnered Rs 1,097 crore.
Hybrid strategies continue to dominate the category with assets of Rs 12,822 crore, while equity-oriented SIFs have more than doubled their assets since March to Rs 5,036 crore, highlighting the rapid expansion of the category within a year of its launch.
