An investor today largely knows the ins and outs of investing in a mutual fund. Pick a category, scan the three- and five-year returns, see who runs the fund, check the expense ratio, study the portfolio, and understand the risk-o-meter. That playbook no longer works for specialised investment funds (SIFs).Two equity long-short SIFs can be launched on the very same day, sit in the very same category, and still behave almost the opposite way. One manager may use derivatives purely to hedge and cushion falls. Another may actively short stocks to chase extra returns. So how to evaluate an SIF?Strategy over categoryTraditional mutual funds are categorydriven; SIFs are strategy-driven. As Amol Patel, Lead Product Specialist, ICICI Prudential Asset Management Company, puts it, “Understanding the investment strategy is critical because, in an SIF, the strategy, and not the scheme name, is the primary driver of returns and risks.”Highlighting the contrast further, Niharika Tripathi, Head–Products and Research, Wealthy.in, says, “SIFs should not be understood as regular mutual funds with only a higher minimum investment. The larger difference lies in the strategy, flexibility and riskreturn profile.”Before you continue readingHow financially free are you?Most people overestimate their financial freedom. Discover your Financial Freedom score through a quick surveyNitin Agrawal, CEO–Mutual Funds, InCred Money, describes the design intent: “SIFs occupy a carefully designed middle ground in the Indian investment landscape, more flexible than mutual funds, more accessible than PMS.”They were created for investors who have outgrown the standardised constraints of mutual fund categories but do not meet the `50 lakh minimum that portfolio management service (PMS) demands. The SIF entry threshold sits at Rs.10 lakh per investor. Mutual funds, Agrawal adds, operate within tight category mandates, while SIFs can employ long-short strategies, use derivatives more actively, and construct portfolios that would not fit neatly into any existing mutual fund category. According to Tripathi, an SIF is “better viewed as a satellite allocation that complements the mutual fund core portfolio rather than as a replacement for traditional equity and debt investments.”