What Is a Specialised Investment Fund

By Chirag Jain, Director of Research and Client Relations, Northbridge Wealth (ARN-41379) Last updated: July 2026

A Specialised Investment Fund, or SIF, is a SEBI-regulated investment product, launched under the mutual fund rulebook, that sits between an ordinary mutual fund and a PMS. It needs a minimum of ₹10 lakh, far below PMS’s ₹50 lakh or an AIF’s ₹1 crore, but unlike a regular mutual fund, it can take short positions using derivatives and run more concentrated, tactical strategies. SEBI created the category in 2025 to give experienced investors access to PMS-style strategies without needing PMS money, while keeping the fund inside a regulated mutual fund structure. It is genuinely new, not a rebrand of anything that existed before.

Where a SIF sits, at a glance

Why SEBI created this category

Before 2025, there was a real gap. A mutual fund is accessible to almost anyone but restricted to long-only positions and broad diversification. PMS and AIFs allow far more flexibility, short positions, concentrated bets, sector rotation, but the entry ticket locks out most investors below ₹50 lakh. SIF was built to fill that gap: sophisticated, strategy-driven investing, inside a regulated mutual fund wrapper, starting at ₹10 lakh.

Not every mutual fund company can offer one. An AMC needs at least three years of operations and roughly ₹10,000 crore in average assets, or a chief investment officer with over a decade of experience managing at least ₹5,000 crore, before SEBI lets it launch a SIF.

The ₹10 lakh minimum is checked across everything you hold in that AMC’s SIF strategies together, not per scheme. So ₹4 lakh in an equity long-short strategy plus ₹6 lakh in a hybrid strategy from the same AMC satisfies the requirement. A dip below ₹10 lakh purely from market movement isn’t a problem. But a withdrawal you initiate that pulls your holdings below the threshold freezes your units, with 30 calendar days to top back up before the AMC redeems the remainder automatically.

Risk is disclosed differently too. Instead of the six-level Risk-o-meter used on regular mutual funds, every SIF strategy carries a five-level Risk-Band, from level 1 (lowest) to level 5 (highest), reviewed monthly.

The three categories and seven strategies

Every SIF must declare one specific strategy in its offer document, chosen from seven that SEBI has defined across three broad categories.

Equity-oriented: an Equity Long-Short Fund keeps at least 80% in equities with room to short up to 25% through derivatives. An Equity Ex-Top 100 Long-Short Fund does the same but focuses on mid and small-cap stocks outside the 100 largest companies. A Sector Rotation Long-Short Fund concentrates at least 80% in up to four sectors, with shorting allowed at the sector level.

Debt-oriented: a Debt Long-Short Fund invests across durations and can take short positions using exchange-traded debt derivatives. A Sectoral Debt Long-Short Fund spreads across at least two sectors, capped at 75% in any one.

Hybrid: an Active Asset Allocator Long-Short Fund can move dynamically across equity, debt, REITs, InvITs, and select commodities. A Hybrid Long-Short Fund must keep at least 25% in equity and 25% in debt at all times.

Across every strategy, SEBI caps net market exposure at 100%, so no strategy can use leverage to bet more than the fund actually holds, even though the gross positions on either side of a long-short trade can add up to more.

What’s actually happening in practice

In theory a SIF can run an aggressive, hedge-fund-style book. In practice, hybrid long-short strategies make up most of the category’s assets so far, and industry commentary suggests many managers use the short and derivative allowance more for hedging and downside protection than aggressive directional bets. That could change as the category matures, so read the actual strategy document rather than assuming every SIF is running maximum shorting just because the rules allow it.

How is a SIF taxed?

This is where the mutual fund wrapper genuinely helps: there is no tax at the fund level, and you are only taxed when you redeem your own units, exactly like an ordinary mutual fund. What you are taxed at depends on what the specific strategy actually holds, not on the fact that it is called a SIF.

A detail worth knowing before you invest: if a SIF’s strategy holds mostly equity, it gets the same treatment as any other equity fund, 12.5% on long-term gains above ₹1.25 lakh a year. But a debt-oriented SIF falls under the same rule as any other debt fund bought after April 2023, the entire gain is taxed at your slab rate, with no long-term discount at all. The mutual fund label doesn’t protect a debt-oriented SIF from that rule. The full mechanics of how fund gains are taxed are in our guide to capital gains tax on mutual funds. https://northbridgewealth.in/capital-gains-tax-mutual-funds-india-2026/

Who should actually consider a SIF?

We see SIF fitting a fairly specific investor. Someone with meaningful savings, comfortably above ₹10 lakh, who has already built a diversified core through ordinary mutual funds, and wants to add one tactical, more sophisticated sleeve without needing PMS-level money, is a good fit. Someone who understands that short positions and sector concentration cut both ways, a strategy can lose money even in a rising market if its calls are wrong, is a good fit.

SIF is not a substitute for a diversified long-term core, and redemption terms vary by strategy, so check the offer document before assuming you can exit whenever you like.

The mistake we correct most often

Clients sometimes hear “regulated like a mutual fund” and assume a SIF carries roughly the same risk as the mutual funds they already own. It doesn’t. The ability to short sell and concentrate in a handful of sectors makes a SIF meaningfully more volatile than a typical diversified equity fund, closer in spirit to a PMS strategy than to a balanced fund, even though it sits inside the same regulatory framework. We treat a SIF allocation the way we would treat a concentrated PMS sleeve: a deliberate, sized addition on top of a diversified base, not a replacement for one.

Frequently asked questions

What is the minimum amount needed to invest in a SIF? 

₹10 lakh, at the PAN level across all SIF strategies offered by a single asset management company. SEBI accredited investors are exempt from this minimum.

Is a SIF the same as a mutual fund? 

Legally, yes, it is launched under mutual fund regulations by an existing AMC. Practically, no, a SIF can take short positions using derivatives and run far more concentrated strategies than a typical mutual fund is allowed to.

How is a SIF taxed? 

The same way a mutual fund is taxed, based on what the fund actually holds. An equity-oriented SIF gets equity tax treatment. A debt-oriented SIF gets taxed at your slab rate with no long-term discount, same as any other debt fund bought after April 2023.

Is a SIF riskier than a regular mutual fund?
It depends on how the strategy uses its tools. The ability to concentrate in a few sectors or stocks can make a SIF more volatile than a diversified, long-only fund. But the same short-selling ability that adds concentration risk can also reduce downside: a short position gains when the market falls, so a long-short strategy can cushion losses in a declining market in a way an ordinary long-only fund cannot. In practice, many SIF managers use shorting more for this hedging and downside protection than for aggressive bets. So a SIF is not simply “riskier”, it is different: potentially steadier on the downside, but more dependent on the manager getting their calls right.

Can I invest in a SIF instead of PMS if I don’t have ₹50 lakh? 

You can access some of the same style of strategy, long-short positioning, sector concentration, tactical allocation, starting at ₹10 lakh through a SIF. It isn’t identical to PMS, since you hold pooled units rather than direct shares, but it closes much of the gap for investors below the PMS threshold.

Sources: Securities and Exchange Board of India, SEBI (Mutual Funds) Regulations, 1996 as amended by the Mutual Funds (Third Amendment) Regulations, 2024, Association of Mutual Funds in India.

Disclaimer: Northbridge Wealth is an AMFI-registered Mutual Fund Distributor (ARN-41379). This article is for general educational purposes only and does not constitute tax, legal, or investment advice. SIF is a relatively new, higher-risk category, and its rules and available strategies may evolve. Please read the specific offer document and consult a qualified professional before investing.