Loading fund NAVs…
Specialized Investment Funds are a SEBI-regulated category, in force since 1 April 2025, built for people who find mutual funds too restrictive but aren't ready for the ticket size of a full portfolio management setup. Here's exactly where SIF sits, what SEBI actually permits inside one, and how it's taxed.
Each rung raises the entry ticket and hands the fund more room to take positions a plain mutual fund scheme can't.
Bar heights are ordered for comparison, not drawn to a linear rupee scale. SIF sits above mutual funds and below PMS/AIF in both ticket size and the freedom given to the fund manager — most notably, the ability to take limited short positions using derivatives, which ordinary mutual fund schemes cannot do.
Nothing outside this list is currently permitted under the SIF framework — this is the complete menu, not a sample of it.
At least 80% in equity and equity-related instruments, with unhedged short positions via derivatives capped at 25% of net assets.
The same long-short structure, applied outside India's 100 largest listed companies — a mid- and small-cap-focused mandate.
Concentrated in no more than four sectors at a time, with the freedom to rotate between them and take limited short positions at the sector level.
Long positions across debt instruments of varying duration, with limited short exposure through exchange-traded debt derivatives to manage interest-rate risk.
The same long-short toolkit applied within debt instruments of a specific sector, rather than across the broader market.
At least 25% each in equity and debt instruments, with tactical short positioning layered on top — most launched so far are structured as interval strategies rather than daily open-ended ones.
The most flexible mandate of the seven: the manager can move across equity, debt, REITs/InvITs and derivatives as the market outlook shifts, within SEBI's overall exposure limits.
| Mutual Fund scheme | SIF strategy | |
|---|---|---|
| Entry point | As low as ₹500 (SIP) or ₹1,000 (lumpsum), scheme-dependent | ₹10 lakh at the PAN level, across an AMC's SIF strategies |
| Short positions | Not permitted | Permitted, capped at 25% of net assets via derivatives |
| Liquidity structure | Almost always open-ended, daily | Open-ended, close-ended or interval — varies by strategy |
| Who can run it | Any SEBI-registered AMC | Only an AMC meeting a 3-year track-record test, or an alternate route requiring a dedicated Chief Investment Officer |
| Branding | Carries the AMC's regular mutual fund brand | Must use a visibly separate brand name and web presence |
A SIF strategy is taxed exactly like a mutual fund scheme with the same underlying allocation — there's no separate "SIF tax rate." What matters is the strategy's real equity exposure, checked against its own factsheet, not its category label.
Equity Long-Short and Equity Ex-Top 100 strategies, holding 80%+ in equity, clear this threshold comfortably. A Hybrid Long-Short strategy only qualifies if its actual equity allocation stays at or above 65%.
Debt Long-Short, Sectoral Debt Long-Short, and any Hybrid or Active Asset Allocator strategy that runs below 65% equity fall here, in line with the "specified mutual fund" treatment under Section 50AA.
SIF investments are subject to market risk, including the added risk of derivative and short positions. Read the Investment Strategy Information Document (ISID) before investing. Tax treatment reflects rules in force as of this year and can change with future Finance Acts.
A consultation paper proposes a new category to sit between mutual funds and PMS, for investors who want more flexibility without a ₹50 lakh entry ticket.
The SEBI (Mutual Funds) (Third Amendment) Regulations, 2024, effective 16 December 2024, establishes SIF as a distinct asset class under the Mutual Fund Regulations.
SEBI's circular dated 27 February 2025 lays out eligibility routes, the seven permitted strategies, minimum investment, branding and disclosure norms in full.
The rules become operational on 1 April 2025, opening the door for eligible AMCs to file for and launch SIF strategies.
SBI Mutual Fund opens the NFO for its Magnum Hybrid Long-Short Fund on 1 October 2025 — the first strategy to market under the new framework.
