Specialised Investment Funds: the new category between mutual funds and PMS

For years, an investor in India had two broad choices for professionally run equity money. A mutual fund, with a low minimum and tight rules, or PMS and AIFs, with minimums of ₹50 lakh and ₹1 crore respectively and far more freedom in strategy.

SEBI's Specialised Investment Fund (SIF) framework, introduced in 2025, creates a category between the two.

What a SIF is

A SIF is run by a mutual fund house, under the mutual fund regulatory structure, but it can use strategies that ordinary mutual fund schemes can't. The most important of these is the ability to take limited short positions, betting that a stock or index will fall.

SIFs are branded separately from the fund house's regular schemes, so you can tell them apart from a normal mutual fund.

The ₹10 lakh minimum

The minimum investment in SIFs is ₹10 lakh per investor, counted across all the SIF strategies of a fund house. It's set deliberately high. These strategies are more complex than a regular equity fund, and the minimum keeps them away from someone's first or only investment.

What a SIF is allowed to do

The framework permits a set of named strategies, broadly in three families:

• Equity-oriented, such as equity long-short strategies, where most of the money is invested in stocks and a small portion is used to hedge or short.
• Debt-oriented, such as debt long-short strategies, using interest-rate derivatives alongside bonds.
• Hybrid, such as active asset allocation strategies, that move between equity, debt and other assets.

Unhedged short exposure through derivatives is capped at 25% of net assets. So a SIF is not a fund that bets on markets falling. It's mostly a long fund with a limited short book.

Who it's for, and who it isn't

A SIF can make sense for an investor who:

• already has a well-built core of regular mutual funds,
• has a corpus where ₹10 lakh is a small slice, not the whole of it,
• understands that a long-short strategy aims to reduce the depth of falls, and may lag in strong rising markets as a result.

It's harder to justify if it would be your largest holding, if you need the money within a few years, or if the main reason is that the product is new.

Newer is not the same as better. A SIF earns its place by doing something your existing portfolio doesn't.

How to evaluate one

Because the category is young, few SIFs have long track records. In the meantime, the questions to ask are:

1. What is the strategy, in one sentence? If it can't be explained plainly, that's information.
2. How large is the short book typically, and what is it for? Hedging and return-seeking are different jobs.
3. What does it cost? Compare the total expense against a plain index fund doing the long side alone.
4. How and when can you redeem?

The short version

SIFs sit between mutual funds and PMS: a ₹10 lakh minimum, mutual-fund-style oversight, and permission for limited short positions. For most investors they are an addition to a sound core, not a replacement for one.