A Specialised Investment Fund or SIF is a SEBI-regulated new asset class, designed for informed investors seeking advanced and differentiated investment strategies.

• Investors seeking actively managed strategies beyond conventional mutual fund categories
• Those comfortable with higher complexity and derivative usage
• Investors seeking customised investment outcomes while staying within a SEBI-regulated structure

Explore the next evolution in investments built for tomorrow’s opportunities.

• Minimum Investment: Rs. 10 lakh aggregate investment per investor across all strategies offered by the SIF at the PAN level.
• Value-added facilities: Option of Systematic Investment Plan (‘SIP’), Systematic Withdrawal Plan (‘SWP’) and Systematic Transfer Plan (‘STP’) for investment strategies launched under the SIF, provided the minimum threshold is maintained.
• Flexible Structures: Open-ended, closed-ended, or interval-based strategies with appropriate frequency of subscription/redemption.
• Derivatives Friendly: The investment strategies under the SIF may take exposure of up to 25% of the net assets in permissible exchange traded derivative instruments, specifically for purposes other than hedging and portfolio rebalancing.
• Stringent Disclosure Norms: Regular portfolio disclosure (every alternate month), Risk-banding framework (5-level risk meter), Scenario analysis depicting expected loss due to market movements, Clear notice periods for redemption (up to 15 working days).

A SIF is an investment strategy under the Mutual Fund trust. A registered Mutual Fund may establish SIF, provided they meet the eligibility criteria under one of the following routes:

Route 1 - Sound track record
The mutual fund must have been operational for at least 3 years and should have maintained an average Assets Under Management (AUM) of no less than ₹10,000 crores immediately preceding three years.
Route 2 – Alternate route:
The AMC must appoint:

• A Chief Investment Officer (CIO) for SIF with a minimum of 10 years’ experience in fund management and an average AUM of at least ₹5,000 crores and.
• An additional Fund Manager for SIF with at least 3 years’ fund management experience and an average AUM of no less than ₹500 crores.

SIFs can follow strategies across three broad categories—Equity, Debt, and Hybrid—each comprising specific subcategories as defined by SEBI:

• Equity: Equity Long-Short Fund, Equity Ex-Top 100 Long-Short Fund, Sector Rotation Long-Short Fund
• Debt: Debt Long-Short Fund, Sectoral Long-Short Fund
• Hybrid: Active Asset Allocator Long-Short Fund, Hybrid Long-Short Fund

SIFs are suited for investors with a higher risk appetite looking to diversify beyond conventional mutual funds. These strategies often involve the use of derivatives for improved return potential and risk management.

• A minimum horizon of 2 years is suggested for short-term objectives.
• For medium-term goals, a horizon of 2 to 5 years is appropriate.
• Long-term investors should ideally stay invested for over 5 years to fully benefit from the strategy.

SIF taxation aligns with mutual fund tax norms:

• Equity strategies: 12.5% tax on Long-Term Capital Gains (LTCG); 20% on Short-Term Capital Gains (STCG)
• Debt strategies: Taxed as per the investor’s income tax slab
• Hybrid strategies (with <65% in equity or debt and a holding period >2 years): LTCG taxed at 12.5%, STCG as per slab There is no tax at the fund level, as per Section 10(23D) of the Income Tax Act.

The investment universe for SIFs depends on the chosen strategy—equity, debt, or hybrid. They also have the flexibility to use derivatives within these instruments to enhance returns and manage risks effectively.

Risk levels vary by strategy:

• Equity strategies are exposed to market volatility, liquidity constraints, and sector or stock concentration.
• Debt strategies may face interest rate fluctuations, credit defaults, low liquidity, and reinvestment risk.
• Hybrid strategies fall between the two in terms of risk. While derivatives provide strategic advantages, they also introduce additional risks such as price swings and limited liquidity. Importantly, short exposure through derivatives is capped at 25%, and must be managed with prudent risk controls.