New Delhi, Oct. 6 -- When markets fall, most investors lose sleep. But a new breed of funds in India is designed to make money even when stocks go south.

Specialized Investment Funds (SIFs), introduced by the Securities and Exchange Board of India (Sebi) earlier this year, mark the arrival of a new product category. Unlike traditional mutual funds that can only take long positions (i.e. buy and hold stocks expecting prices to rise), SIFs give fund managers the flexibility to also profit from a decline in stock prices.

So far, three asset management companies-Edelweiss, Quant, and SBI-have launched their first set of SIFs.

SIFs can invest in both long and short strategies. Unlike traditional mutual funds that thrive mainly when markets ...