What is a Specialised Investment Fund?
A Specialised Investment Fund (SIF) is a new category of investment product created by SEBI and in effect from April 2025. SIFs are run by mutual fund houses that meet SEBI's eligibility criteria, under a separate brand from their regular mutual funds.
The key difference from a mutual fund is flexibility. A SIF can take limited short positions through derivatives, up to 25% of net assets on an unhedged basis. That allows long-short strategies that ordinary mutual funds cannot run.
The minimum investment is ₹10 lakh per investor, counted across all the SIF strategies of a fund house. Accredited investors are exempt from this minimum.
What strategies can a SIF run?
SEBI has defined a set of permitted strategies across equity, debt and hybrid, including:
- Equity long-short. Mostly long equity, with limited short positions to protect against falls or profit from overvalued stocks.
- Equity ex-top 100 long-short. The same idea, focused beyond India's largest 100 companies.
- Sector rotation long-short. Moving between sectors as conditions change.
- Debt long-short and sectoral debt long-short. Fixed income strategies with derivative flexibility.
- Active asset allocator and hybrid long-short. Moving between equity, debt and other assets.
Redemption terms vary. Some SIF strategies offer daily liquidity and others are interval funds that open for redemption only at set times. Read the offer document before investing.
SIF vs PMS compared
| SIF | PMS | |
|---|---|---|
| Minimum investment | ₹10 lakh | ₹50 lakh |
| Who runs it | Eligible mutual fund houses | SEBI-registered portfolio managers |
| Structure | Pooled fund; you hold units | Your own portfolio in your own demat account |
| Short selling | Allowed, limited to 25% unhedged via derivatives | Generally long-only |
| Tax | Taxed like mutual funds, on redemption | Every trade taxed in your hands |
| Transparency | Periodic portfolio disclosure | Full view of every holding and trade |
| Track record | New category, limited history | Many strategies with long histories |
How SIFs are taxed
SIFs are pooled funds, so trades inside the fund do not create tax for you. You pay tax only when you redeem units, in the same way as mutual funds. Equity-oriented strategies are taxed as equity funds, and others according to their category.
This is a real advantage over a high-turnover PMS, where every sale by the manager can create short-term gains in your name. For investors in the top tax bracket, deferring tax until redemption can make a meaningful difference over several years.
Tax treatment depends on each strategy's asset mix and on current law. Confirm the position for your situation with your chartered accountant.
Who each one suits
A SIF may suit you if you want more than a mutual fund offers, such as a long-short approach, but do not want to commit ₹50 lakh to a single PMS. It also suits investors who prefer mutual-fund-style taxation.
A PMS may suit you if you want full transparency, a portfolio held in your own name, a manager with a long track record or the ability to move existing shares in directly.
Because SIFs are new, the main limitation is history. Most strategies have only a short track record, so judging the fund house's process and risk controls matters even more. Our guide on how to choose a PMS covers checks that apply equally well to SIFs.
Frequently asked questions
What is the minimum investment in a SIF?
The minimum is ₹10 lakh per investor, counted across all SIF strategies of a single fund house. Accredited investors are exempt from this minimum.
Is SIF better than PMS?
Neither is better in every case. A SIF offers long-short flexibility and mutual-fund-style taxation from ₹10 lakh. A PMS offers full transparency, ownership of securities in your own name and, often, a longer track record.
Who can launch a SIF in India?
Only mutual fund houses that meet SEBI's eligibility criteria, based on track record and assets under management or on the experience of their investment team, can launch SIFs.
How are SIFs taxed?
SIFs are taxed like mutual funds. You pay capital gains tax when you redeem units, based on the strategy's asset mix and how long you held them.
This guide is for general information only and is not investment, tax or legal advice. Investments are subject to market risk. Please read all scheme documents carefully and consult your own tax and legal advisers.