The Securities and Exchange Board of India (SEBI) has introduced a new investment product called the Specialised Investment Fund (SIF), aimed at bridging the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS). This new category offers more flexibility than mutual funds while maintaining stricter regulatory oversight than PMS, making it an attractive option for investors with greater investible income than typical mutual fund investors.
SIFs are a new category of high-risk, potentially high-return mutual funds that allow fund managers to implement advanced investment strategies such as long-short positions, sector rotation, and asset allocation. Unlike traditional Mutual Funds, SIFs offer greater flexibility in portfolio management and investment choices.
Over time, SEBI identified a gap between Mutual Funds and PMS. While Mutual Funds are heavily regulated and follow traditional investment styles, PMS offers greater flexibility but comes with high costs and less regulatory oversight. SIFs were introduced to bridge this gap by allowing more sophisticated investment strategies while still adhering to SEBI’s mutual fund regulatory framework.
SIFs are not suitable for small retail investors due to their complex strategies and ₹10 lakh minimum investment requirement.
SEBI has permitted various investment strategies under SIFs, categorized into equity-oriented, debt-oriented, and hybrid strategies:
Equity-Oriented: Includes Equity Long-Short Fund (80% in equities, 25% short exposure), Equity Ex-Top 100 Long-Short Fund (focus on mid and small caps, max 25% short exposure), and Sector Rotation Long-Short Fund (invests in up to four sectors, 25% short exposure per sector).
Debt-Oriented: Includes Debt Long-Short Fund (debt securities with limited short positions) and Sectoral Debt Long-Short Fund (invests across at least two sectors, max 75% in a single sector).
Hybrid Strategies: Includes Active Asset Allocator Long-Short Fund (invests dynamically in equity, debt, REITs, InvITs, commodities, max 25% short exposure) and Hybrid Long-Short Fund (at least 25% in both equity and debt, max 25% short exposure).
Investors are required to invest a minimum of ₹10 lakh. This investment threshold applies exclusively to SIFs and does not include investments in regular Mutual Funds of the same AMC. While Systematic Investment Plans (SIPs), Systematic Withdrawal Plans (SWPs), and Systematic Transfer Plans (STPs) are permitted, investors must ensure that their total investment remains above the ₹10 lakh minimum requirement.
Unlike PMS and AIFs (which have different tax structures), SIFs follow Mutual Fund taxation rules.
SEBI’s Specialised Investment Funds (SIFs) offer a new dimension in mutual fund investing. They bring hedge-fund-like strategies to a regulated mutual fund framework, making them attractive to individuals with higher investible funds and a higher risk tolerance than typical mutual fund investors.
