Synopsis: Investors who want more than a mutual fund but less complexity than a portfolio management service, the specialised investment fund (SIF) comes as a good option to consider. This article simplifies the concept of SIF in mutual funds, the allowed investment strategies, and who should consider investing.
In the earlier system the Indian investing landscape had few categories, the conventional mutual fund with a minimum investment of ₹500 or even lower, and the customised category of portfolio management service (PMS) of minimum investment of ₹50 lakh. The ₹500 to ₹50 lakh gap always was in two extremes. In 2025, the SEBI introduced the Specialised Investment Fund (SIF), bridging the gap between conventional mutual funds and the PMS.
What is SIF?
A Specialised Investment Fund (SIF) is the new investment instrument introduced by SEBI, effective from April, 2025, that allows the Asset Management Companies (AMCs) to offer strategy focused schemes with much portfolio flexibility than the conventional mutual funds. This operates under the same mutual fund framework regulated by SEBI, but in SIF use of complex investment strategies like, long-short equity, sector-based positioning, and active asset allocation, and can take unhedged short positions up to 25% of the portfolio using derivatives.
Note: A regular mutual fund can only buy the stocks but a SIF manager can also short them, and potentially benefit even when the markets fall.
How is it any different from Mutual Funds and PMS?
SIFs have a minimum investment requirement of ₹10 lakh which is much lower than the ₹50 lakh requirement for a PMS and a ₹1 crore requirement in an AIF.
What Investment Strategies are Allowed?
To prevent excessive proliferation of funds, only one investment strategy is permitted per category under a single AMC.
Equity-Oriented Strategies
Source: Feb 27, 2025, Circular No.: SEBI/HO/IMD/IMD-I POD-1/P/CIR/2025/26
Debt-Oriented Strategies
Source: Feb 27, 2025, Circular No.: SEBI/HO/IMD/IMD-I POD-1/P/CIR/2025/26
Also read: FD Rate Update: Banks That Have Revised Their Fixed Deposit Interest Rates in 2026
Hybrid-Investment Strategies
Source: Feb 27, 2025, Circular No.: SEBI/HO/IMD/IMD-I POD-1/P/CIR/2025/26
- Taxation- The taxation of SIF, decided by SEBI, is same as mutual fund, and in case of equities a STCG tax of 20% and LTCG tax of 12.5% get levied, and for debt mutual funds capital gains are taxed as per the investor’s income tax slab.
- Liquidity and SIP Options- Liquidity in SIFs varies depending on the fund’s structure and strategy. AMCs are permitted to offer SIP, SWR, and STP under SIFs, provided that the cumulative should be ₹10 lakh across these modes.
Who should and shouldn’t invest!!!
- Should
- Have a minimum of ₹10 lakh investable surplus more than their emergency fund and regular SIPs
- Have a moderate to high risk tolerance, and a long investment horizon
- Understand how derivatives, short positions, and leverage strategies work
- Shouldn’t
- First-time investors and are new to market-linked products
- Investor who needs high liquidity or predictable monthly returns
- Investors who cannot handle short-term volatility or potential amplified drawdowns
Conclusion
SIF is not a replacement for mutual funds or PMS, it is just an alternative instrument that the investors can consider for gaining more financial flexibility than the mutual fund but less capital requirement than PMS. Please note before any investment decision, consulting a SEBI-registered financial advisor is strongly recommended.
Written by Jahnavi
