What is a Specialised Investment Fund (SIF)?

A Specialised Investment Fund (SIF) is an investment vehicle tailored for experienced investors, offering flexible and innovative strategies. It provides access to niche sectors like private equity, startups, and real estate.

What is the minimum investment for SIFs?

The minimum investment required for a SIF is ₹10 lakh, as per SEBI guidelines. This lower threshold compared to PMS makes it more accessible to eligible investors.

How are SIFs different from mutual funds?

SIFs focus on specialised sectors and allow fund managers greater flexibility in creating custom strategies. Mutual funds, in contrast, have predefined, diversified strategies and cater to a wider range of investors.

Are SIFs suitable for beginners?

SIFs are designed for experienced investors who understand market risks and have a high-risk appetite. They are not suitable for beginners or those with limited market knowledge.

Who can invest in an SIF?

SIFs are available to HNIs, institutional investors, and experienced investors who understand risks and fulfil the ₹10 lakh minimum requirement. To invest in SIF, you must meet SEBI's eligible investor requirements.

SIFs generally invest in liquid listed securities, so they are more liquid than Private Equity or Real Estate funds. However, depending on the fund's specific strategy (e.g., if it uses complex derivative structures), the redemption window might be weekly or fortnightly rather than daily.

What are Specialised Investment Funds (SIF)?

India's investment sector continues to evolve, and many seasoned investors are looking for more concentrated opportunities outside traditional products. Specialised Investment Funds (SIFs) are developing as a versatile choice for investors seeking focused exposure to high-growth industries.

By bridging the gap between mutual funds and portfolio management services (PMS), SIF investment allows experienced investors to explore complex strategies like Long-Short Equity and Inverse ETFs that were previously available only to ultra-rich investors. Let’s explore what these funds are and how they redefine investing in India.

Key Takeaways

SIFs offer a middle ground between Mutual Funds and PMS/AIFs, with a minimum investment of ₹10 Lakh.

They provide access to sophisticated strategies like Long-Short Equity and Inverse ETFs using derivatives.

SEBI regulates these funds, ensuring they stay within the public market framework

Ideal for investors who want "Hedge Fund-like" strategies but at a lower entry barrier than PMS.

What is a Specialised Investment Fund?

A Specialised Investment Fund is a meticulously curated investment structure designed for experienced investors seeking access to high-growth, high-risk investments inside a professionally managed framework. It is designed to support more advanced strategies than traditional investment products, enabling experts to allocate capital across specific themes and asset classes, including equity, debt, real estate, private equity, and alternative investments, in response to market conditions and growth potential.

Each SIF investment fund has a dynamic mandate, allowing fund managers to pursue unique ideas while maintaining strict monitoring and risk controls. This allows investors to engage in specific opportunities that may not be available through traditional market channels. SIFs can also use Derivatives for non-hedging purposes. This means they can potentially generate returns even in falling markets or through complex high-risk strategies.

SIFs use a combination of strategic diversification and expert evaluation to assist investors in capturing considerable upside in specialist areas while ensuring that portfolio selections are structured, educated, and consistent with long-term wealth-building goals.

How Do SIFs Work?

SIF Funds operate within a structured framework that brings together qualified investors, a professional fund manager, and a well-defined investment strategy. Once the fund is created, investors contribute capital, which is aggregated into a single corpus. This pool serves as the foundation for implementing the fund's selected theme, which might be developing industries, unconventional assets, or focused opportunities.

Each SIF is formed with a specific mandate that specifies the types of instruments it may invest in, the level of flexibility provided to the management, and the desired decision-making style. After raising capital, the fund manager examines possible opportunities, does due diligence, and distributes the funds gradually rather than all at once. This enables the fund to respond to changing market circumstances and profit from favourable entry spots.

These funds work primarily via reporting and oversight. Investors receive regular updates on the portfolio's condition, value adjustments, and the reasoning behind major choices. SIFs allow for tactical modifications, but all actions must adhere to regulatory rules to maintain accountability.

SEBI Regulations & Minimum Investment Rules (2025)

SEBI's 2025 framework establishes an organised approach to participation in Specialised investment Funds, providing clarity on who may invest, how much they must commit, and how AMCs must maintain continuous compliance. The essential regulatory criteria are listed below:

Minimum Investment Threshold: SEBI requires a ₹10 lakh minimum investment, determined at the PAN level for all SIF strategies provided by a single AMC. This amount represents the entire SIF exposure with that AMC and excludes investments in its standard mutual fund schemes.

Accredited Investor Exemption: Accredited investors do not need to meet the ₹10 lakh minimum criterion. Their eligibility is determined by SEBI's net-worth and qualifying guidelines.

Allowable Investment Modes: AMCs may provide SIP, SWP, and STP alternatives for SIFs. These ways are allowed as long as the total commitment exceeds ₹10 lakh, unless the investor is accredited.

Ongoing Monitoring and Compliance: AMCs must review investor holdings on a daily basis to guarantee continuous compliance. Passive value losses due to market fluctuations are allowed, but reductions induced by redemptions or transfers may necessitate the investor to exit the SIF.

Why SEBI Introduced Specialised Investment Funds?

Investors in India usually choose between mutual funds and PMS. But there’s a gap between the two:

Mutual Funds

Easy to start: You can invest small amounts, making them perfect for beginners and small investors.

Set strategies: Mutual funds follow predefined strategies, which means less flexibility for investors or fund managers.

Lower risk: These are safer and are best suited for conservative investors.

Portfolio Management Services (PMS)

Customised investments: PMS tailors your investments to meet your specific financial goals.

High investment: You need at least ₹50 lakh to start, which makes it unaffordable for most people.

For big players: PMS is for experienced investors who can handle higher risks.

This is where Specialised Investment Funds (SIFs) come in. With a lower minimum investment of ₹10 lakh, SIFs cater to investors who want more flexibility and higher returns than mutual funds but cannot afford PMS.

Specialised Investment Funds (SIFs) Meaning

A Specialised Investment Fund (SIF) is an investment option designed for people who understand the markets and are willing to take higher risks for potentially higher returns. Here’s what you need to know about SIFs:

Minimum investment: To invest in a SIF, you need to put in at least ₹10 lakh.

Flexibility: Fund managers have more freedom to try new strategies compared to mutual funds.

Variety: SIFs can invest in everything from stocks and bonds to real estate and private equity.

However, this freedom comes with rules to ensure safety and prevent overly risky behaviour. Let’s take a look at these guidelines.

Guidelines for SIF Investments

1. Debt instruments

SIFs can invest up to 20% of their assets in debt issued by a single entity.

This limit can increase to 25% with approval from trustees.

Investments in government securities and treasury bills are exempt from these restrictions.

2. Equity investments

SIFs can hold up to 15% of a company’s paid-up capital with voting rights.

They can invest up to 10% of their Net Asset Value (NAV) in any one company’s equity shares.

3. REITs and InvITs

SIFs can allocate 20% of their NAV to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

However, no more than 10% can be invested in a single issuer.

4. Derivatives

Up to 25% of net assets of a SIF can be used for unhedged derivatives (equity or debt) investments, not just hedging.

Cumulative gross exposure (long + short positions) across all markets (cash + derivatives) cannot exceed 100% of net assets.

Derivative exposure in a single stock is capped and should not exceed 10% of a single stock's derivative value.

5. Unlisted securities

SIFs can invest in unlisted securities, but they are subject to a regulatory cap. Exposure to unlisted securities must not exceed 30% of the fund's Assets Under Management (AUM).

These rules ensure that SIFs stay diversified and don’t take on too much risk in one area.

What are the Advantages of SIFs?

SIFs let you invest in specialised areas like real estate, private equity, or emerging industries.

Since SIFs take on higher risks, they also offer the chance for higher rewards compared to traditional mutual funds.

Expert fund managers handle your investments, ensuring that decisions are backed by deep market knowledge.

SIFs help you spread your investments across different sectors, reducing risk and increasing stability.

Things to Consider Before Investing in SIFs

Eligibility: SIFs are designed for institutional investors, professional investors, and HNIs with a minimum investment requirement of ₹10 lakh.

Risk tolerance: Since SIFs focus on specific sectors, they carry higher risks compared to diversified mutual funds. Understand your risk appetite before investing.

Liquidity: SIFs often invest in illiquid assets like real estate or infrastructure, making it difficult to withdraw your investment quickly.

Regulations: Familiarise yourself with SEBI’s guidelines and the specific terms of the SIF you’re interested in to avoid surprises.

SIF vs Mutual Funds

Aspect	SIF	Mutual Funds
Minimum Investment	₹10 lakh	₹500 or more
Risk Level	High	Moderate to Low
Flexibility	More freedom for fund managers	Limited by predefined strategies
Target Audience	Experienced investors	Retail and small investors

Who Should Invest in SIFs?

Experienced investors: Those who have a strong understanding of markets and can handle higher risks.

HNIs and institutions: Investors with substantial capital who want to explore niche opportunities.

Risk-takers: If you’re comfortable with market volatility, SIFs could be a good option.

Conclusion

Specialised Investment Funds (SIFs) bring a fresh approach to investing in India, offering flexibility, innovation, and the potential for higher returns. They fill the gap between mutual funds and PMS, making them a great choice for experienced investors who want more control over their investments.

However, SIFs come with higher risks and complexities. It’s important to understand these aspects fully and consult a financial advisor to ensure that SIFs align with your financial goals.

What are Specialised Investment Funds (SIFs)?