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A Specialized Investment Fund (SIF) is a recently introduced investment option by SEBI in India. It is specially designed for those investors who want more flexibility than traditional mutual funds.
SIF falls in the middle of traditional Mutual Funds and high-ticket PMS (Portfolio Management Scheme) & AIF (Alternative Investment Fund). SIF is not retail-friendly as Mutual Funds and also not exclusive, such as PMS/AIF.
A professional fund manager manages SIF and allows investors to participate in customized strategies like private credit, thematic equity, or structured debt, with a minimum investment of Rs. 10 lakhs.
The investment strategies in SIF include exposure to:
- Equity
- Debt
- Real estate investment trusts (REITs)
- Derivatives like futures and options (F&O).
What is the Need for SIF?
The SIF investment product has been launched by SEBI to fill the gap between MF & PMS. The purpose of SIFs is:
- A diverse, expert investing choice for professionals, business owners, and others with increasing wealth
- Availability of various approaches not seen in mutual funds
- A controlled platform that is nonetheless easier to use than AIF or PMS
Wealth managers and AMCs may now provide customized portfolios to a larger group of sophisticated, non-retail (HNI) investors thanks to SIFs, all without compromising investor protections and compliance.
Who can invest in SIF?
SEBI states that you are eligible if you fulfil one of these requirements:
- Your annual income ≥ ₹2 crore (in each of the last 2 years), or
- Your Net worth ≥ ₹7.5 crore (excluding your primary residence)
What is the difference between Mutual Funds, SIF & AIF?
With good reason, this is one of the most popular searches. On the surface, mutual funds and SIFs are both subject to SEBI regulation, are overseen by qualified AMCs, and pool investor capital.
But they differ drastically in:
- Who can invest
- Minimum amount required
- Strategy flexibility
- Risk level
- Liquidity
|
Feature |
Mutual Fund (MF) |
SIF (Specialized Investment Fund) |
PMS (Portfolio Management Services) |
Alternative Investment Fund (AIF) |
|
Regulator |
SEBI |
SEBI |
SEBI |
SEBI |
|
Min. Investment |
Rs. 100/- –Rs. 500/- |
Rs. 10 lakhs (unless accredited) |
Rs. 50 Lakhs |
Rs. 1 Crore |
|
Investor Type |
Retail, HNIs, Everyone |
HNIs, Professionals, Accredited Investors |
HNIs and ultra-HNIs with a long-term view
|
Institutions or HNIs and ultra-HNIs with a long-term view
|
|
Strategy Flexibility |
Low to moderate (predefined schemes) |
High (thematic, credit, hedge, etc.) |
Very High |
Very High |
|
Liquidity |
High - daily redemptions allowed |
Low/Limited– exit rules apply |
Very Limited (Custom Exits) |
Mostly closed-end, long lock-in |
|
Transparency |
High (monthly portfolio disclosures) |
Moderate (quarterly/semi-annual updates) |
High |
Low-Moderate |
|
Risk Level |
Low to Medium (depending on category) |
Medium to High |
Very High |
Very High |
|
Portfolio |
Investors can create an investment portfolio of MF schemes on their own/through a Financial Advisor in Equity/Debt/ Commodity as per the risk profile. |
AMC-backed pooled vehicle, with SEBI-defined rules but more flexibility than a Mutual Fund and lower ticket size than PMS/AIF |
Custom portfolio, directly in your name |
Pooled fund structure across Category I (startup), II (PE/credit), and III (hedge). |
Where Do SIFs Invest? (Investment Strategies in India)
As per the rules & regulations of SEBI, SIF can invest in below strategies. All permitted strategies fall into three categories:
- Equity-Oriented Strategies of Investment:
- Equity Long‑Short Fund - Minimum 80% in equities and equity-related instruments, with up to 25% unhedged short exposure via derivatives.
- Equity Ex‑Top 100 Long‑Short Fund - At least 65% in stocks outside the top 100 by market cap; up to 25% short derivative exposure.
- Sector Rotation Long‑Short Fund - 80% in up to 4 sectors, with a 25% short exposure allowed at the sector level.
- Debt-Oriented Strategies in Investment:
- Debt Long‑Short Fund - Invests in various debt instruments; can take unhedged short positions through debt derivatives (typically weekly redemption frequency).
- Sectoral Debt Long‑Short Fund - Focuses on at least two debt sectors, with a 75% limit per sector; can take short positions up to 25% of NAV in debt.
- Hybrid Investment Strategies
- Active Asset Allocator Long‑Short Fund - Dynamically allocates between equity, debt, derivatives, REITs/InvITs, and commodities; allows 25% short exposure.
- Hybrid Long‑Short Fund - At least 25% each in equity and debt, with up to 25% short exposure.
Taxation Rules under SIF:
Tax rules of SIF are similar to Mutual Funds.
- Equity-oriented SIFs (holding equity instruments for over 12 months) are taxed at 12.5% LTCG.
- Debt-oriented SIFs as per the Tax Slab.
- Other (equity holdings less than 65% at gross level): (holding period > 24 months) also benefit from a 12.5% LTCG rate.
- Short-term gains are taxed either at the slab rate or 20%, depending on the asset class and holding period.
How to Invest in SIF?
- Choose an AMC Offering SIFs
- Check Your Eligibility w.r.t income / net worth
- Select the Right Strategy (Equity, Debt / Hybrid)
- Complete KYC & Documents
- Invest & track the portfolio performance
What are the risks involved in SIF?
- SIFs invest in sectors, strategies, or debt that fluctuate more than standard mutual funds.
- Liquidity is low. Exits are restricted; unlike mutual funds, you cannot redeem the amount from your portfolio daily.
- SIFs can follow thematic or focused strategies. It invests in fewer stocks and has higher exposure to specific sectors. It has a concentration risk.
- SIFs may offer updates quarterly or semi-annually. It does disclose the portfolios on a monthly basis like Mutual Funds.
Key Points to Note:
As specified in its offer agreement, each SIF is only permitted to apply one approach. The frequency of redemptions varies by approach, ranging from interval-based windows to daily/weekly. For all strategy types, unhedged short exposure is limited to 25% of NAV across debt and equities.
SIFs are for serious investors who want more control and access to niche strategies - but can also handle higher risk and lesser liquidity.
Mutual funds remain the best choice for simplicity, liquidity, and regulated transparency.
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