Key takeaways
- A Specialised Investment Fund (SIF) is a SEBI-regulated category introduced in 2025, sitting between mutual funds and PMS.
- The minimum investment is ₹10 lakh across a fund house’s SIF strategies, with relaxations for accredited investors.
- SIFs are offered by eligible mutual fund houses under a separate brand identity from their mutual funds.
- They may use derivatives more freely than mutual funds, including limited unhedged short exposure.
- Taxation follows mutual fund rules, based on whether the strategy is equity-oriented.
What is a Specialised Investment Fund?
A Specialised Investment Fund is a category SEBI created through amendments to the mutual fund regulations, with the framework taking effect from April 2025. It is meant to close an obvious gap: mutual funds start at a few hundred rupees but are tightly constrained, while PMS starts at ₹50 lakh and AIFs at ₹1 crore. Between them sat investors with ten or twenty lakh who wanted more than a plain mutual fund.
SIFs are offered by mutual fund houses that meet SEBI’s eligibility conditions, and must carry a brand identity distinct from the fund house’s mutual funds, so investors do not confuse the two.
The ₹10 lakh minimum
- The minimum is ₹10 lakh per investor, across all SIF strategies of a single fund house — not per strategy.
- Accredited investors are exempt from the threshold.
- If withdrawals take your balance below the minimum, the rules require the remaining balance to be handled in line with the scheme’s terms, so read them before making partial redemptions.
What SIFs are allowed to do
SEBI permits a defined list of strategies rather than leaving the field open. Broadly they fall into three families:
| Family | Examples of what is permitted |
|---|---|
| Equity | Long-short equity, sector rotation, and strategies excluding the largest listed companies |
| Debt | Long-short debt, and sector-focused debt strategies |
| Hybrid | Active asset allocation and hybrid long-short strategies |
The important freedom is derivatives. A mutual fund may generally use them only to hedge or rebalance; a SIF may take unhedged short exposure through derivatives, within limits SEBI sets as a share of assets. That is what allows genuinely long-short strategies at this ticket size.
Where SIFs sit
| Mutual fund | SIF | PMS | Category III AIF | |
|---|---|---|---|---|
| Minimum | A few hundred rupees | ₹10 lakh | ₹50 lakh | ₹1 crore |
| What you own | Units | Units | Securities in your own demat | Units |
| Short selling / leverage | Mostly hedging only | Limited unhedged shorts via derivatives | Generally long-only | Leverage up to 2× NAV |
| Liquidity | Any business day | Per scheme; notice periods possible | Flexible, exit loads capped | Windows or fixed term |
| Taxed | On redemption | On redemption, as a mutual fund | Every sale, in your hands | At the fund |
For the products either side of SIFs, see what is PMS and hedge funds in India.
How SIFs are taxed
Because SIFs sit within the mutual fund framework, their taxation follows mutual fund rules rather than the PMS or AIF treatment. In broad terms, a strategy that qualifies as equity-oriented is taxed like an equity fund, and others are taxed according to their composition. You are taxed when you redeem, not on trading inside the fund — the tax deferral that makes fund structures efficient for active strategies.
The comparison with PMS taxation, where every sale is taxed in your hands, is set out in how PMS and AIFs are taxed.
Who SIFs suit — and who they don’t
- They suit investors with ₹10 lakh or more who want a hedged or differentiated strategy, professional management, and mutual fund-style tax treatment and oversight.
- They suit investors building towards PMS-sized portfolios who want more than an index fund in the meantime.
- They don’t suit anyone who wants to see and own the underlying securities — that is PMS.
- They don’t suit investors who cannot explain what the strategy does. Long-short and derivative strategies fail in ways plain equity funds do not.
As with any new category, the first question is not "can I access it?" but "what does this do in my portfolio that something simpler doesn’t?"
Frequently asked questions
What is a Specialised Investment Fund (SIF)?
A SEBI-regulated category introduced in 2025, offered by eligible mutual fund houses under a distinct brand. It permits strategies mutual funds cannot run, such as long-short equity, at a far lower minimum than PMS.
What is the minimum investment in a SIF?
₹10 lakh per investor across all SIF strategies of a single fund house. Accredited investors are exempt from the threshold.
How is a SIF different from a PMS?
A SIF is a pooled fund whose units you own, from ₹10 lakh, taxed on redemption like a mutual fund. A PMS holds securities in your own demat account, needs ₹50 lakh, and taxes every sale in your hands.
How is a SIF different from a mutual fund?
SIFs may use derivatives more freely, including limited unhedged short positions, and are restricted to strategies SEBI has defined. They carry a separate brand identity and a ₹10 lakh minimum.
How are SIFs taxed?
Under mutual fund rules, based on whether the strategy is equity-oriented, with tax arising when you redeem rather than on trading inside the fund.
Are SIFs riskier than mutual funds?
They can be. The ability to take unhedged short exposure through derivatives introduces risks a plain equity fund does not carry. Read the scheme documents and be sure you understand how the strategy makes and loses money.
