Specialized Investment Funds (SIFs) in India – A Complete Guide for Investors (2025)

SEBI noticed a gap in the investment landscape. Mutual funds are great for retail investors, but their strategies are restricted to long-only equity or debt. On the other side, PMS and AIFs allow highly flexible strategies but come with a very high entry ticket (₹50 lakh–₹1 crore) and lighter regulation. Many affluent investors with ₹10–50 lakh wanted sophisticated strategies but within a regulated framework. That’s where SIFs come in — they combine regulated structure (like MFs) with flexible strategies (like PMS/AIF). This fills the “missing middle” for investors who don’t fit neatly into the MF or PMS categories.

Not every fund house can launch a SIF. SEBI has set eligibility criteria:

Route 1 (Sound Track Record): AMCs with at least 3 years of operation and average AUM of ₹10,000 crore over the last 3 years can apply.

Route 2 (Alternate Route): Newer AMCs can launch if they hire experienced leadership — a CIO with 10+ years experience managing ₹5,000 crore+ and another Fund Manager with 3+ years managing ₹500 crore+.
In both cases, the AMC must have a clean SEBI record. This ensures only serious, experienced players launch SIFs.

SIFs are designed for HNIs and accredited investors. While there’s no restriction on who can apply, the ₹10 lakh minimum investment makes it practically suitable for wealthier investors. Accredited investors, however, can bypass this minimum and invest even smaller amounts. Institutional investors like corporates, trusts, and family offices are also eligible. SEBI’s intention is to ensure investors in SIFs are financially strong enough to handle the higher risks.

An Accredited Investor (AI) is someone recognized by SEBI as financially sophisticated and capable of investing in advanced instruments. The criteria are:

Individuals / HUF / Family Trusts: Net worth of at least ₹7.5 crore (with ₹3.75 crore in financial assets) OR annual income of ₹2 crore+.

Partnership Firms / Corporates: Net worth of at least ₹50 crore.

Other trusts / institutions: Net worth of at least ₹50 crore.
Accredited Investors are verified through SEBI-recognized agencies. For SIFs, the biggest benefit is they don’t need to meet the ₹10 lakh minimum investment rule. So, an accredited investor can start with a smaller amount if they wish.

For most investors, the entry point is ₹10 lakh per PAN per AMC across all SIF strategies. For example, if you invest ₹6 lakh in one SIF scheme and ₹4 lakh in another of the same AMC, you satisfy the ₹10 lakh rule. If your investments fall below ₹10 lakh due to withdrawals, you may have to exit the scheme. Accredited investors, however, are exempt from this rule and can invest less than ₹10 lakh.

Yes, SEBI allows SIFs to offer systematic plans (SIP, SWP, STP) just like mutual funds. However, investors must still maintain the ₹10 lakh threshold. For instance, if you start a SIP of ₹50,000 per month, you’ll need to build up to ₹10 lakh total across schemes of that AMC. If at any point your SIF holding dips below the ₹10 lakh minimum (due to redemption or losses), you may be required to exit.

SIFs follow mutual fund taxation rules. After the July 2024 amendments:

Equity-oriented SIFs:

LTCG (>12 months) above ₹1.25 lakh taxed at 12.5% (no indexation).

STCG (≤12 months, STT-paid) taxed at 20%.

Debt-oriented SIFs:

STCG: taxed at your slab rate.

LTCG: usually 12.5% without indexation for transfers after July 23, 2024 (grandfathering rules may apply).
This makes SIF taxation aligned with regular mutual funds, giving investors clarity.

SIFs can choose from SEBI-approved strategies:

Equity long-short funds (≥80% equity, up to 25% short).

Ex-top 100 long-short funds (focus on mid- and small-caps).

Sector rotation long-short funds (max 4 sectors).

Debt long-short funds (using debt derivatives).

Sectoral debt long-short funds (at least 2 sectors).

Active asset allocator hybrid funds (dynamic equity, debt, REITs, commodities).

Hybrid long-short funds (at least 25% equity + 25% debt).

SIFs can take up to 25% unhedged short exposure through derivatives. This is on top of any hedged positions. For example, if a fund invests ₹100 crore, it may short up to ₹25 crore worth of equity or debt instruments. This gives managers more flexibility than mutual funds (which cannot take naked shorts).

They can be either. SEBI allows SIFs to be open-ended, closed-ended, or interval-based. For example, equity long-short funds may be open-ended, while some hybrid or debt SIFs may be interval-based. Closed-ended and interval schemes must be listed on stock exchanges to provide liquidity.

Liquidity in SIFs is lower than regular mutual funds.

Redemptions can be offered daily, weekly, monthly, or even quarterly, depending on the scheme.

SEBI allows AMCs to impose a redemption notice period of up to 15 working days.
So, while you won’t face 3–5 year lock-ins like AIFs, SIFs won’t offer instant liquidity like mutual funds.

SEBI hasn’t mandated a fixed lock-in for all SIFs. However, individual schemes may choose to impose lock-ins (e.g., 1-year lock for certain strategies). Closed-ended SIFs effectively have a lock-in until maturity, though units may be listed on exchanges for secondary exit.

Minimum investment: ₹10 lakh vs as low as ₹500 in MFs.

Strategies: Long-short, hybrid, and sector rotation allowed in SIFs but not in MFs.

Liquidity: SIFs may delay redemptions, while MFs allow daily liquidity.

Target audience: SIFs target HNIs; MFs target mass retail.

Investment size: SIF minimum is ₹10 lakh, PMS minimum is ₹50 lakh.

Structure: PMS is customized for each investor; SIFs are pooled like MFs.

Regulation: PMS has lighter regulations compared to the stringent framework of SIFs.

Taxation: SIFs taxed like MFs; PMS taxation happens at the individual level.

Minimum investment: SIF ₹10 lakh vs AIF ₹1 crore.

Liquidity: SIFs can have interval or open-ended structures; AIFs typically have 3–5 year lock-ins.

Taxation: SIFs taxed like MFs; AIF Cat III taxed differently (business income possible).

Target investors: SIFs for HNIs; AIFs for ultra-HNIs and institutions.

SIFs are suitable for:

Experienced investors with ₹10 lakh+ surplus.

HNIs looking for diversification into hedge-like strategies.

Investors comfortable with medium-to-high risk and moderate liquidity.
Not suitable for:

Beginners, conservative investors, or retirees needing stable income and quick liquidity.

Market risk: Exposure to equities, debt, commodities.

Derivatives risk: Shorting magnifies gains and losses.

Liquidity risk: Redemption timelines may not be daily.

Concentration risk: Sectoral strategies may face higher volatility.
Investors must understand these risks before committing ₹10 lakh+.

Yes, all closed-ended and interval SIF strategies must be listed on recognized stock exchanges. This provides an exit route if you cannot redeem during the scheme’s lifecycle. However, liquidity on exchanges may be low initially, so don’t rely solely on secondary markets.

Once AMCs launch SIFs (post-April 2025), you can invest through:

AMC’s platform or RTA.

Mutual fund distributors (with the required certifications).

Demat account, if the scheme is listed.
Ensure you meet the ₹10 lakh threshold (unless accredited) and carefully read the scheme’s offer document before investing.