Specialized Investment Funds (SIFs)
What Are Specialized Investment Funds (SIFs)?
SIFs are a newly introduced category of investment vehicles regulated under SEBI Mutual Fund Regulations (Reg. 49W to 49Z). They aim to bridge the flexibility gap between Mutual Funds and PMS by offering goal-aligned, strategy-specific portfolios.
Effective Date and Entry Requirement
Launch Date: April 1, 2025
Minimum Investment: ₹10 lakh per PAN across strategies
Key Features at a Glance
| Feature | SIF | Mutual Fund | PMS | AIF |
|---|---|---|---|---|
| Regulated By | SEBI | SEBI | SEBI | SEBI |
| Entry Threshold | ₹10 lakh | ₹500–₹5,000 | ₹50 lakh | ₹1 crore |
| Risk Labeling | Yes (Risk-Band) | Yes (Riskometer) | No | No |
| Liquidity | Weekly–Monthly | Daily | Lock-in or limited | Lock-in |
| Customization | Moderate | Low | High | High |
| Benchmarking | Single-tier | Single/dual | Not mandated | Not mandated |
Permitted Investment Strategies Under SIFs
SEBI permits three strategy buckets:
A. Equity-Oriented Strategies
| Type | Key Characteristics | Short Limit | Redemption |
|---|---|---|---|
| Equity Long-Short | 80% in equity; short exposure capped at 25% | Unhedged | Daily or lower |
| Ex-Top 100 | Minimum 65% in stocks beyond top 100 by market cap | ≤ 25% | Daily or lower |
| Sector Rotation | Max 4 sectors; min. 80% equity allocation | ≤ 25% | Daily or lower |
B. Debt-Oriented Strategies
| Type | Key Characteristics | Short Limit | Redemption |
|---|---|---|---|
| Debt Long-Short | Duration-based debt + derivatives | ≤ 25% | Weekly or lower |
| Sectoral Debt | Min 2 sectors; max 75% in one | ≤ 25% | Weekly or lower |
C. Hybrid Strategies
| Type | Allocation | Short Limit | Redemption |
|---|---|---|---|
| Active Asset Allocator | Equity, Debt, REITs, Commodities | ≤ 25% | Twice a week |
| Hybrid Long-Short | ≥25% in equity and debt | ≤ 25% | Twice a week |
Note: Only one strategy per category is allowed per AMC.
Who Should Consider SIFs?
- Informed investors seeking curated long-short exposure
- Those who outgrow mutual funds but don't meet PMS/AIF minimums
- Investors with moderate-to-high risk tolerance and long-term horizons
Risks Associated with SIFs
- Market Risk: NAV fluctuations like any equity/debt product
- Liquidity Risk: Redemptions only weekly/monthly
- Derivatives Risk: Up to 25% unhedged exposure
- Complexity Risk: May not suit first-time investors
- Minimum Investment Breach: Below ₹10 lakh may trigger full redemption
Risk-Band Framework
SIFs use a 5-level Risk-Band model (like Mutual Fund Riskometer), updated monthly and published on AMC/AMFI websites.
SEBI-Defined Governance and Disclosures
- Max 25% of net assets in speculative (non-hedging) derivatives
- Portfolio disclosed bi-monthly
- Scenario analysis mandatory in ISID
- Mandatory listing for close-ended and interval funds
- Max redemption notice: 15 working days
- Minimum ₹10 lakh tracked at PAN level
Source Documents & References
- SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 (Feb 27, 2025)
- SEBI MF Regulations (Reg. 49W to 49Z)
- SEBI Master Circular (June 27, 2024)
- AMFI guidelines (expected March 31, 2025)
Wealth North Verdict
SIFs offer a promising evolution — bridging the gap between Mutual Funds and PMS with structure, flexibility, and transparency. For investors ready to take the next step but not yet PMS-eligible, SIFs could become the ideal fit once launched.