SIFs: a new kind of fund that starts at ₹10 lakh
Since April 2025, fund houses can run long-short strategies that sit between a mutual fund and a PMS. Here is what the higher ticket buys, and what it costs you in flexibility.
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SEBI created Specialised Investment Funds (SIFs) on 27 February 2025, and the rules took effect on 1 April 2025. A SIF is run by a mutual fund house, under the mutual fund rules, but it can do two things an ordinary mutual fund cannot: bet against stocks or bonds, and run more concentrated strategies.
The entry ticket is ₹10 lakh. That amount is counted per PAN across every SIF strategy the same fund house offers, so ₹5 lakh in two strategies from one fund house meets it. Accredited investors are exempt from the minimum.
Where SIFs sit
| Product | Minimum | Short selling |
|---|---|---|
| Mutual fund | A few hundred rupees | Derivatives for hedging only |
| SIF | ₹10 lakh | Unhedged shorts up to 25% of net assets, through exchange-traded derivatives |
| Portfolio management service (PMS) | ₹50 lakh | Derivatives for hedging only |
| Category III AIF | ₹1 crore | Allowed, within leverage limits |
The seven strategies
SEBI allows seven strategies. Each fund house can offer one of each.
- Equity long-short: at least 80% in equity.
- Equity ex-top 100 long-short: at least 65% in companies outside the 100 largest.
- Sector rotation long-short: at least 80% in equity, across no more than four sectors.
- Debt long-short: bonds, with limited short positions.
- Sectoral debt long-short: bonds from at least two sectors, no more than 75% in one.
- Active asset allocator long-short: moves between equity, debt and other assets.
- Hybrid long-short: at least 25% each in equity and debt.
What changes for you
- Taking money out can be slower. Equity strategies may redeem daily or less often, debt strategies weekly or at set intervals, and hybrid strategies at least twice a week. Fund houses can also ask for notice before a redemption; the scheme document gives the period.
- Tax follows what the fund holds, as with mutual funds. An equity-heavy strategy is taxed like an equity fund; a debt strategy like a debt fund.
- Shorts add a risk ordinary funds do not have. A short position loses money when the market rises, and the loss has no ceiling. The 25% limit caps how much of the fund can be in unhedged shorts.
- Track records are short. The category has existed since April 2025, so no SIF has a record through a full market cycle.
Questions to ask before you invest
- What has the strategy’s net equity exposure been, month by month, after shorts?
- How often can I redeem, and how much notice does the fund house need?
- What is the total expense ratio, and how does it compare with the same fund house’s ordinary funds?
- How did the strategy do in its worst month so far?
Questions
- What is the minimum investment in a SIF?
- ₹10 lakh per PAN, counted across every SIF strategy the same fund house offers. Accredited investors are exempt.
- How is a SIF different from a mutual fund or a PMS?
- A mutual fund can use derivatives only for hedging and has a low minimum; a PMS starts at ₹50 lakh. A SIF sits between them: ₹10 lakh minimum, and unhedged shorts of up to 25% of net assets.
- How are SIFs taxed?
- Like mutual funds: tax follows what the fund holds, so an equity-heavy strategy is taxed like an equity fund and a debt strategy like a debt fund.
- Can I redeem a SIF any day?
- Not always. Equity strategies may redeem daily or less often, debt strategies weekly or at set intervals, and hybrid strategies at least twice a week; the scheme document gives any notice period.
Sources
- Business Today: SEBI introduces Specialised Investment Funds with a ₹10 lakh minimum (27 Feb 2025)
- Kotak Mutual Fund: What are Specialised Investment Funds
- Business Standard: SIFs, bridging the gap in modern-day investing
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
