Specialised Investment Funds (SIFs): Meaning, Rules, Benefits, Risks, Taxation & How to Invest in 2025

Investing money wisely has always been important for building wealth and securing financial goals. For many years, mutual funds have been a popular choice because they are easy to understand and available to most people. On the other hand, Portfolio Management Services (PMS) offer personalized investment options but need a very high minimum investment, making them inaccessible to many investors.

To fill this gap, the Securities and Exchange Board of India (SEBI) introduced a new investment category called Specialised Investment Funds (SIF) starting April 2025.

SIF funds are designed for experienced investors who want more flexibility and smart strategies than mutual funds but with lower investment limits than PMS. With a minimum investment of ₹10 lakh, SIFs allow fund managers to use advanced strategies like long-short positions and sector rotation to seek better returns.

If you want to understand how SIF funds work and whether they might be a good investment option for you, this blog will explain everything from the basics to the benefits, risks, taxation, how they compare with other investment options in India and how to get started.

Let us start from the basics.

What is a Specialised Investment Fund (SIF)?

A Specialised Investment Fund, or SIF, is a new type of investment fund introduced by the Securities and Exchange Board of India (SEBI) starting April 1, 2025. It was created to fill a gap between traditional mutual funds and Portfolio Management Services (PMS), which usually require very high minimum investments.

Specialised Investment Funds are designed especially for experienced investors who want more flexibility than what mutual funds offer but may not be able to invest huge amounts needed for PMS. The minimum investment needed to enter a SIF is ₹10 lakh per PAN, making it accessible for high-net-worth investors who want to explore advanced investment strategies.

Unlike regular mutual funds, Specialised Investment Funds allow fund managers to use sophisticated techniques like long-short equity, sector rotation, and dynamic allocation across multiple asset classes. These allowed strategies give the fund a better chance to earn higher returns by adjusting positions according to market conditions.

Specialised Investment Funds operate under SEBI’s mutual fund regulations, so they still offer regulatory oversight and transparency, protecting investors while allowing more aggressive and flexible investment approaches.

Suggested Read: Top Performing SWP Mutual Funds in 2025

Why Did SEBI Introduce SIFs?

SEBI introduced Specialised Investment Funds (SIFs) to fill an important gap in India’s investment ecosystem. Until recently, investors had only two main choices, mutual funds or Portfolio Management Services (PMS).

Mutual funds are easy to invest in and well regulated but offer limited flexibility in investment strategies. On the other hand, PMS allows sophisticated and customized strategies but requires very high minimum investments, usually ₹50 lakh or more, making it inaccessible for many investors.

Specialised Investment Funds provide a middle ground. They are designed for high-net-worth individuals (HNIs), accredited investors, and professionals who want access to advanced investment strategies without the steep minimum investment of PMS.

SIFs allow fund managers to use smart techniques like long-short equity, sector rotation, and active asset allocation while operating under SEBI’s regulatory framework for investor safety.

This new asset class helps meet the growing demand for innovative, flexible, and regulated investment options among India’s affluent and knowledgeable investors. It also aims to prevent investors from turning to unregulated or risky schemes by providing a safe, transparent alternative.

SIFs, therefore, bridge the gap by combining the best of mutual funds and PMS, strategy flexibility, moderate entry requirements, and regulatory oversight.

Key Features of Specialised Investment Funds (SIFs)

Specialised Investment Funds (SIFs) come with distinct features that set them apart from traditional mutual funds and Portfolio Management Services (PMS). Here are the key features you should know about:

• Minimum Investment Requirement: To invest in SIFs, you need to invest at least ₹10 lakh per PAN across all SIF strategies offered by the same Asset Management Company (AMC). This makes SIFs accessible to high-net-worth individuals and accredited investors.
  
  
• Investment Strategies Allowed: SIFs permit a range of sophisticated investment strategies. These include long-short equity (buying some stocks while short-selling others), sector rotation (moving investments across sectors), hybrid strategies combining equity and debt, and active asset allocation.
  
  
• Portfolio Flexibility: SIFs allow fund managers to diversify investments across multiple asset classes such as equities, debt instruments, derivatives, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and commodities. This flexibility helps in risk diversification and aims for better returns.
  
  
• Redemption and Liquidity Norms: Unlike traditional mutual funds with daily liquidity, SIFs may impose redemption restrictions including notice periods (usually up to 15 days) and lock-in periods, depending on the fund structure. There are open-ended, interval, and closed-ended SIF structures offering different liquidity options.
  
  

These features make SIFs a versatile and strategic investment vehicle for sophisticated investors aiming for higher returns through advanced portfolio management, yet within a regulated framework.

Suggested Read: Best Mutual Funds in India with SIP Under ₹100

Key Features of SIFs

SIF funds have certain characteristics that make them different and more powerful compared to traditional investment options. These features are designed to give investors both flexibility and regulatory safety.

Minimum Investment Requirement

To invest in a SIF fund, the minimum amount currently required is ₹10 lakh per PAN across all SIFs managed by the same AMC. This ensures that only investors with sufficient financial understanding and risk capacity participate.

Flexibility in Investment Strategies

Unlike mutual funds that must follow strict, predefined rules, SIF fund managers can choose from a wide range of strategies such as:

• Long-short strategies (buying some stocks while short-selling others)
  
  
• Sector rotation (moving investments across sectors)
  
  
• Market-neutral approaches
  
  
• Hybrid allocation
  
  
• Opportunities beyond the top 100 listed companies
  
  

This gives them the ability to act smarter and faster based on market conditions.

Wider Portfolio Diversification

SIFs allow fund managers to diversify investments across multiple asset classes such as equities, debt instruments, derivatives, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and commodities.

This flexibility helps in risk diversification and aims for better returns.

Redemption and Liquidity Norms

Unlike traditional mutual funds with daily liquidity, SIFs may impose redemption restrictions including notice periods (usually up to 15 days) and lock-in periods, depending on the fund structure. There are open-ended, interval, and closed-ended SIF structures offering different liquidity options.

This protects the investment strategy from forced selling when markets are volatile.

Regulatory Supervision

Even though SIFs are more flexible, they are still fully monitored by SEBI.

This ensures proper disclosures, independent oversight and risk communication to investors.

In simple terms: SIF funds combine the freedom of advanced investing with the safety of regulation.

Types of SIF Strategies

SIF funds are built to give fund managers the flexibility to use multiple investing techniques based on market behaviour. Here are the most common strategy categories used by SIFs in India:

Equity-Oriented SIFs

These SIFs mainly invest in shares of companies but with more freedom than typical equity mutual funds.

Common equity strategies include:

Long-Short Strategy

Buying stocks expected to rise and short-selling stocks expected to fall. This helps reduce risk in volatile markets.

Sector Rotation Strategy

Switching between sectors (like IT, pharma, banking etc.) based on economic trends.

Ex-Top 100 Strategy

Focusing on mid-cap and small-cap companies outside the top 100 listed stocks to capture higher growth opportunities.

Best suited for investors believing equity can outperform in the long run but want better risk control.

Debt-Oriented SIFs

These SIF funds invest mainly in bonds and other debt instruments, but again with greater flexibility.

Examples:

Long-Short Debt Strategy

Betting on interest rate movements, credit opportunities or spreads.

Sectoral Debt Strategy

Focusing on high-yield segments within industries like NBFCs or infrastructure.

Good for investors seeking stable income with controlled risk.

Hybrid SIFs

These funds combine equity + debt + sometimes derivatives in one portfolio.

Popular hybrid approaches:

Active Asset Allocation

Dynamically increasing equity exposure in rising markets and shifting to debt when markets look uncertain.

Balanced Long-Short Strategy

Using both buying and short-selling approaches to manage risk while targeting equity-like returns.

Excellent for investors wanting diversification without managing multiple products.

Fund Structure Variants

SIFs can be launched in three formats:

Structure Type	Liquidity Level	Best For
Open-Ended SIF	High liquidity	Investors need flexibility to redeem anytime
Interval SIF	Moderate liquidity	Investors okay with scheduled exit windows
Closed-Ended SIF	Low liquidity, defined tenure	Investors with long-term horizons and higher risk tolerance

The AMC selects the structure based on investment strategy and liquidity needs.

In summary, SIF funds allow strategies that were earlier possible only in institutional-grade or PMS products. Investors get smarter wealth-building tools with professional execution.

Who Can Invest in SIFs?

Eligibility Criteria

To invest in a Specialised Investment Fund (SIF) you must meet certain requirements because this fund type is designed for more experienced investors.

• The minimum investment across all SIF strategies under one PAN is ₹10 lakh, unless you qualify as an “accredited investor”.
  
  
• The investment threshold is at the PAN level for a given Asset Management Company (AMC), not per individual SIF scheme.
  
  
• Accredited investors (who meet specific financial or professional criteria) may be exempt from the ₹10 lakh minimum.
  
  

What is an “Accredited Investor”?

While the exact rules can differ, an accredited investor is usually someone who:

• Has a high net worth or high annual income;
  
  
• Understands investment risks and has experience;
  
  
• Can tolerate losses since advanced strategies are involved.
  
  

Investor Suitability & Risk Profile

SIFs are most suitable for investors who:

• Have substantial surplus capital (not their emergency fund)
  
  
• Are comfortable with higher risk, and understand advanced investment techniques (like long-short strategies)
  
  
• Have a medium to long investment horizon (because liquidity may be less than typical mutual funds)
  
  
• Prefer strategies beyond the standard mutual fund options and are okay with complexity
  
  

Conversely, SIFs may not be appropriate for:

• Investors with small capital or who need frequent liquidity
  
  
• Investors unfamiliar with investing or those unwilling to accept higher risk
  
  
• Those who expect guaranteed or very predictable returns
  
  

Benefits of Investing in SIFs

SIF funds offer several advantages for investors who want to go beyond the limitations of regular mutual funds. Below are the key benefits explained simply.

Access to Advanced Investment Strategies

Normal mutual funds can only “buy and hold” stocks or bonds.

SIF funds can:

• Short-sell stocks to make money even when prices fall
  
  
• Switch sectors quickly when trends change
  
  
• Use derivatives to manage risk
  
  

This gives investors more opportunities in both rising and falling markets.

Better Diversification Across Sectors and Asset Classes

SIFs can invest in:

• Equity
  
  
• Debt
  
  
• Derivatives
  
  
• Hybrid combinations
  
  

A mix of strategies reduces the impact of a single market downturn and helps stabilize performance.

Potential for Higher Risk-Adjusted Returns

Because fund managers can take active decisions, hedge risks, and tap into niche opportunities, SIF funds aim to deliver stronger returns with comparatively better control over downsides.

Regulated by SEBI for Transparency and Safety

Even though SIF funds allow advanced strategies, they:

• Must follow SEBI’s guidelines
  
  
• Provide proper disclosures
  
  
• Maintain risk-labelling
  
  
• Follow compliance and reporting standards
  
  

This ensures investors are protected from mismanagement and hidden risks.

Designed for Smart Long-Term Wealth Building

SIF funds help sophisticated investors:

• Navigate volatile markets
  
  
• Capture growth phases more aggressively
  
  
• Control losses with hedging strategies
  
  

In short, SIF funds combine the intelligence of PMS with the regulatory comfort of mutual funds.

Risks and Considerations

While SIF funds offer advanced strategies and growth opportunities, they also come with certain risks that investors must understand before investing.

Market Risk

Even with hedging tools like long-short strategies, the value of a SIF can rise or fall with market movements.

Losses are still possible, especially during extreme volatility.

Credit Risk (for Debt-Oriented SIFs)

If the fund invests in bonds or lends to companies, any default or credit downgrade can impact returns.

Liquidity Risk

Some SIF structures may not allow:

• Frequent withdrawals
  
  
• Quick exit during emergencies
  
  

Because advanced strategies may need time to deliver results, investors should be ready for longer holding periods.

Complexity and Manager Dependency

The performance of a SIF depends heavily on:

• Strategy execution
  
  
• Fund manager’s skill
  
  
• Timely decisions
  
  

If decisions go wrong, losses may be higher than in traditional mutual funds.

Higher Costs

SIFs may involve:

• Performance-linked fees
  
  
• Higher research and trading costs
  
  

These costs can reduce net returns if performance does not meet expectations.

Tax Implications

Taxation of SIFs may differ from traditional equity or debt mutual funds.

Investors must be prepared for:

• Reporting obligations
  
  
• Higher tax outflow in some cases
  
  

Quick Summary

Benefit	Risk
Higher return potential	Higher risk exposure
More diversification	Complex strategies
Professional management	Requires financial understanding
SEBI regulated	Limited liquidity

SIF funds are therefore best suited for investors who understand risk and can stay invested for the long term.

How SIFs Compare with Other Investment Options

Feature	Specialised Investment Funds (SIFs)	Traditional Mutual Funds	Portfolio Management Services (PMS)
Investor Eligibility	Accredited investors, High Net Worth Individuals (HNIs), and professionals	Open to the general public, including retail investors	Ultra HNIs and institutional investors
Minimum Investment	₹10 lakh per PAN across all SIFs from an AMC	As low as ₹100 for retail investors (SIPs possible)	₹50 lakh or more
Regulatory Framework	Under SEBI Mutual Fund Regulations with special provisions for SIFs	SEBI Mutual Fund Regulations	SEBI PMS Regulations
Investment Strategies	Advanced strategies like long-short equity, sector rotation, hybrids	Primarily long-only strategies (equity, debt, hybrid)	Highly customized personalized portfolios
Asset Class Flexibility	Equities, debt, derivatives, REITs, InvITs, commodities	Primarily equities and debt	Wide range, including private equity, real estate
Liquidity	May have redemption restrictions (notice period, lock-in)	Generally daily liquidity	Restricted liquidity, customized exit terms
Risk Profile	Higher due to leverage, short selling, concentrated bets	Moderate, depending on fund type	Variable, based on customized strategy
Cost Structure	Higher fees including performance fees	Lower management fees	Typically higher fees plus performance fees
Transparency	Regulated disclosures, but complex strategies	Regular disclosures, easy to understand	Varies, generally good but less frequent than MFs

This table highlights that SIFs provide a middle ground offering greater strategy flexibility and sophistication than mutual funds but with lower entry barriers and more regulation compared to PMS. They are designed for investors seeking tactical and dynamic portfolio management within a regulated and transparent framework.

How to Invest in Specialised Investment Funds (SIFs)

Investing in SIF funds is slightly different from investing in a normal mutual fund because there are eligibility checks and specific documents involved. Here is a simple guide to help you understand how the investment process works.

Step-by-Step Investment Process:

Choose an AMC or Wealth Advisor

SIFs are launched and managed by SEBI-registered Asset Management Companies (AMCs). Investors can explore available SIF strategies through AMC websites, wealth management firms, or investment advisors.

Check Eligibility

Ensure you meet the minimum requirement, usually ₹10 lakh per PAN across all SIF offerings under the same AMC. Alternatively, you must qualify as an accredited investor.

Complete KYC and Documentation

You must provide PAN, Aadhaar, address proof, income proof or net worth certificate (if required), investor risk-profile form, and accreditation proof (if applicable).

Sign Subscription Agreement

This document confirms how much you are investing, the strategy and fund you are choosing, and your investor rights and responsibilities.

Fund Transfer & Allotment of Units

After paperwork is approved, units are allotted at the prevailing NAV (Net Asset Value) depending on fund structure.

What to Look for Before Investing in SIF Funds

• Fund Manager’s Experience: Advanced strategies need expert handling.
  
  
• Strategy Fit: Should match your financial goals and risk appetite.
  
  
• Fee Structure: Higher fees are common, know what you are paying.
  
  
• Liquidity Terms: Exit options must suit your time horizon.
  
  
• Risk Disclosures: Must clearly explain downside scenarios.
  
  
• Transparency & Reports: Regular updates show professional governance.
  
  

SIFs are sophisticated investments that require understanding and confidence. If any of these points are unclear during your decision-making, ask questions until you feel comfortable. These are not “invest now, understand later” products but require careful evaluation.

Taxation of Specialised Investment Funds (SIFs)

SIFs in India are structured similarly to equity mutual funds, and their taxation aligns with mutual fund regulations.

• Short-Term Capital Gains (STCG): If you hold SIF units for less than 12 months, gains are taxed at 20%. (Previously, it was 15%.)
  
  
  
• Long-Term Capital Gains (LTCG): If you hold SIF units for more than 12 months, gains are taxed at 12.5%. (Earlier, this was 10%.)
  
  
• No Indexation Benefit: The tax regime for SIFs does not offer the indexation benefit for long-term gains. This means you cannot adjust your purchase price for inflation before calculating your taxable profit resulting in higher tax liability for long-term investors.
  
  
• Tax is Due Only on Exit: Taxes apply only when you redeem (sell) your SIF units, not during the holding period.
  
  

SIF taxation, therefore, is simple and predictable. However, the removal of indexation for long-term gains makes the effective tax rate slightly higher than before, especially for investors with long holding horizons. Always check the latest tax rules and consult a SEBI-registered advisor for personalized advice.

Regulatory and Disclosure Norms

SIF funds are formally regulated by SEBI under a structured framework introduced in April 2025. The goal is to allow sophisticated investing while ensuring strong investor protection.

SEBI’s Regulatory Framework

• SIFs are governed under Mutual Fund Regulations with special provisions for flexibility.
  
  
• SEBI ensures rules are followed for strategy, asset allocation and risk management.
  
  
• Only well-established AMCs can launch SIFs. AMCs must either:
  
  
  • Have minimum 3 years of operating history and at least ₹10,000 crore average AUM, or
    
    
  • Have a highly experienced fund management team in place. This ensures only capable players manage SIFs.
    
    

Minimum Investment Rule

• ₹10 lakh per PAN across all SIFs under the same AMC.
  
  
• Ensures only financially capable and risk-aware investors participate.
  
  
• Exceptions:
  
  
  • Accredited investors
    
    
  • AMC employees involved in investment management
    
    

This keeps the product focused on the right audience.

Distinct Branding

• SIFs must have a separate brand name and logo.
  
  
• This helps avoid confusion with regular mutual funds from the same AMC.
  
  

Disclosure & Reporting

SIF funds must disclose:

• Information Statement (ISID) instead of bulky scheme documents
  
  
• Quarterly or semi-annual updates (not monthly like regular MFs)
  
  
• Clear risk rating and suitability description
  
  
• Performance summary and investment strategy updates
  
  

This helps investors stay fully informed even when strategies are advanced.

Liquidity Rules & Redemption Norms

• SIFs can be open-ended, interval, or closed-ended.
  
  
• Lock-in periods may apply depending on strategy.
  
  
• Redemption windows may require up to 15 days’ notice.
  
  
• Listing norms apply for closed-ended SIFs if offered.
  
  

This reduces the chances of forced selling in volatile markets.

Continuous Monitoring and Compliance

• SEBI and trustees regularly review:
  
  
  • Investment exposure
    
    
  • Risk management processes
    
    
  • Branding and communication standards
    
    
  • Disclosure quality and reporting timelines
    
    
• Independent audits and compliance checks protect investors.
  
  

Quick Summary

What Investors Get	Why It Matters
Strong compliance and oversight	Safety and fairness
Clear strategy and risk labelling	No guesswork for investors
Regular reporting	Transparency in performance
AMC experience requirements	High-quality fund management

Future Outlook for SIFs in India

SIF funds are still very new in the Indian investment market, but they have a strong future because they solve a real gap between mutual funds and PMS/AIF products. As more investors look for strategies that protect their downside while aiming for higher returns, SIFs are expected to gain popularity quickly.

Growing Interest from Wealthy Investors

HNIs and accredited investors are increasingly demanding:

• More personalized strategies
  
  
• Better downside protection
  
  
• Access to high-quality fund managers
  
  

SIF funds deliver all of this while staying regulated by SEBI.

More AMCs Expected to Launch SIFs

Currently, only AMCs that meet strict experience and AUM requirements can launch SIFs.

As more fund houses upgrade their talent and scale, new SIF categories and products are likely to enter the market.

Better Access to Modern Investment Techniques

Global markets move fast, and long-only equity strategies may not always perform.

SIFs bring:

• Hedging opportunities
  
  
• Sector-based tactical moves
  
  
• Flexible asset allocation
  
  

This will play a key role in future wealth management.

Evolving Regulations for Better Investor Protection

SEBI is closely monitoring:

• How SIFs operate
  
  
• Which strategies deliver real value
  
  
• Ensuring investors stay protected
  
  

Regulations may get sharper and clearer as the category grows.

Big Picture Summary

Why SIFs Will Grow	Impact
Demand for smarter strategies	Better wealth-building options
Strong SEBI framework	Investor confidence increases
Entry of more AMCs	More variety and competition
Higher financial literacy in India	More HNIs explore advanced products

SIF funds are expected to become an important part of India’s future wealth management ecosystem for sophisticated investors.

Conclusion

The investing world in India is evolving fast, and investors today want more than just traditional products. They want better risk management, more opportunities for returns, and greater flexibility when markets change direction. SIF funds have been introduced by SEBI exactly for this purpose. They allow advanced strategies like long-short, sector rotation, and dynamic asset allocation that were earlier available only to ultra-rich investors or institutions.

With their moderate minimum investment requirement, strong SEBI supervision, well-defined disclosure norms, and focus on transparency, SIF funds create a balanced path between regular mutual funds and high-ticket PMS or AIF structures. They open the door to smarter investing while still protecting investor interests.

However, like every investment product, SIFs come with their own risks. They are meant for experienced investors who understand market fluctuations and are willing to stay invested for the long term. Clear evaluation, proper guidance, and alignment with personal financial goals remain essential.

If you are a high-net-worth or accredited investor looking for sophisticated strategies within a regulated environment, SIF funds can be a strong addition to your portfolio.

Disclaimer: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities are quoted as an example and not as a recommendation.

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