New Delhi, April 17 -- A new investment product designed to hook India's wealthier retail investors may eat hedge funds' lunch given their tax edge and target audience, industry executives said.

Specialized investment funds (SIFs) are a bridge between retail-focused mutual funds and portfolio management services (PMS) targeting the rich. While entry to alternative investment funds (AIFs) starts at Rs.1 crore and they are taxed at the highest marginal rate, one can sign up for an SIF with Rs.10 lakh, and enjoy the same tax treatment as mutual funds.

Industry experts said that long-short funds, which bet on both rising and falling markets - are expected to take a bigger hit.

"A long-short fund in an SIF will be tax-efficient compared to ...