What is a SIF (Specialised Investment Fund)?

For a long time, Indian investors had two main ways to hand money to a professional fund manager: mutual funds, open to anyone from a few hundred rupees but bound by strict limits on strategy, and portfolio management services (PMS) or alternative investment funds (AIFs), which allow more freedom but need a far larger minimum investment. In 2025 SEBI created a category in between: the Specialised Investment Fund, or SIF. This guide explains what a SIF is, what it can do that a mutual fund cannot, who it is meant for, and the risks.

Where a SIF sits

The figures above are those set by SEBI at the time of writing. Accredited investors (people who meet SEBI's income or net worth tests) may be exempt from some minimums. Minimums and rules can change, so check the current figures on the SEBI and AMFI websites.

What a SIF can do that a mutual fund cannot

The key difference is the ability to take short positions: bets that a share or an index will fall. Ordinary mutual funds can use derivatives mainly to hedge. A SIF can hold an unhedged short position through derivatives, up to a limit set by SEBI as a percentage of the fund's net assets (25% under the framework at launch; check the current limit).

That allows long-short strategies. A fund manager can buy shares they like and, at the same time, sell futures on shares or indices they expect to do worse. If the market falls, the short side can soften the loss. If the manager's picks are right, the fund can gain from both sides. If they are wrong, it can lose on both sides.

SEBI defined a set of strategy types at launch, broadly in three groups:

• Equity: equity long-short, equity long-short outside the largest 100 companies, and sector rotation long-short.
• Debt: debt long-short and sectoral debt long-short.
• Hybrid: active asset allocation long-short and hybrid long-short.

Each SIF strategy has its own document describing what it may hold. The SIF page lists the strategies that have launched, with their portfolios where published.

A worked example of a long-short position

Suppose a SIF has ₹100 crore. The manager holds ₹100 crore of shares they expect to do well and sells NIFTY futures worth ₹20 crore as an unhedged short (20% of net assets). Over a month:

• NIFTY falls 5%, from 25,000 to 23,750. The short futures gain about ₹1 crore (5% of ₹20 crore).
• The shares fall 4%, losing ₹4 crore.
• The fund loses about ₹3 crore, or 3%, compared with 4% without the short.

Now reverse it: NIFTY rises 5% and the shares rise 4%. The shares gain ₹4 crore, the short loses ₹1 crore, and the fund gains about 3%, less than a fund without the short. The short position reduces both losses and gains here. In other cases, if the manager shorts the wrong things, it adds losses. Costs and margin are ignored in this simple example. The futures and options guide explains the instruments involved.

How SIFs are run

• Who can launch one: mutual fund houses that meet SEBI's eligibility tests on track record and size, or on the experience of their fund managers.
• Separate brand: a SIF must carry a name and identity distinct from the fund house's mutual funds, so investors do not confuse the two.
• Structure: a strategy can be open-ended, closed-ended or interval (open for buying and selling only at set times). Many have less frequent redemption than a mutual fund, sometimes with a notice period. Check each strategy's terms.
• Risk labels: SIFs use their own risk scale, shown in their documents.
• Disclosure: portfolios and NAVs are published, similar to mutual funds.

SIFs also have an expense ratio, and the cost of running long-short strategies can be higher than for a simple index fund. Check the current fee in each strategy's documents. Tax treatment follows the type of holdings and the rules in force; check with a tax adviser.

Context: the mood behind new products

New fund categories tend to attract the most money when investors feel confident. The market mood score below shows whether the market is in fear or greed right now:

Look at the reading as context for any decision. A long-short strategy is designed to behave differently from the market in both moods, so judge it over full market cycles, not over a few good months.

Who a SIF may suit, and who it does not

• It is designed for investors with large portfolios who already understand equity risk and want a strategy that is not purely long-only.
• It is not designed as a first investment, a substitute for an emergency fund, or a place for money needed soon.
• Because the category is new, there is little track record. Past results of a fund house's mutual funds say little about how a long-short strategy will do.

Nothing here is a recommendation for or against any SIF.

How investing in a SIF works

1. Read the strategy documents. Each SIF strategy publishes what it may hold, its short-position limits, its risk level, its fees and its redemption terms.
2. Check the minimum. The minimum applies per investor across all the SIF strategies of one fund house, so several smaller amounts in the same house's SIFs can count together. Confirm how the current rule works with the fund house.
3. Invest through the fund house or a distributor, much as with a mutual fund, after the usual identity checks (KYC).
4. Know the exit route. Note how often you can redeem, how much notice is required and whether any exit load applies.
5. Track it against a fair benchmark. A long-short fund should be judged against its stated aim and over a full market cycle, not against the hottest index of the year.

Risks and common mistakes

• Strategy risk. A long-short fund can lose on both sides at once if the manager's views are wrong.
• Liquidity. Redemption may be weekly or less often, with notice periods. Check before investing.
• Derivatives risk. Short positions can lose more than expected in a sharp rally.
• Confusing a SIF with a mutual fund. Same fund house, different rules, minimums and risks.
• Using stale figures. Minimums, limits and eligible strategies may be revised; check SEBI and AMFI for the current ones.