When most people think of investments, they imagine mutual funds, stocks, SIPs, or FDs. But there is another category that has quietly grown in India, which is Specialised Investment Funds (SIFs). Recognising the need for an investment vehicle that sits between retail-oriented mutual funds and high-ticket PMS offerings, SEBI introduced the concept of Specialised Investment Funds (SIFs). It is designed to provide access to private, alternative, and non-traditional asset classes.
In this article, we will explore what SIFs are, how they work, their benefits, risks, and the type of investors they are best suited for.
What Are SIFs?
Specialised Investment Funds (SIFs) are a new SEBI-introduced investment structure, effective April 1, 2025, created for investors who prefer strategy-based and professionally managed portfolios. They carry a minimum investment requirement of ₹10 lakh, making them more accessible than PMS but still positioned above traditional mutual funds.
Unlike mutual funds, which operate within a long-only framework and largely perform well only when markets move up, SIFs offer greater flexibility through the use of short exposure. This allows managers to take both positive and negative views on stocks or sectors, making it possible to generate returns during market declines and achieve tighter risk management.
On top of this, SIFs can combine equity, debt, and hybrid strategies within a single fund and adjust allocations as conditions change, providing a more adaptable and disciplined approach during volatile market cycles.
How Do SIFs Work?
Specialised Investment Funds operate through a pooled investment structure where capital is collected from eligible investors and managed by a professional fund manager. Each fund is built around a defined mandate or strategy, and the manager executes this mandate using research-driven decisions. Once investors commit at least ₹10 lakh, the fund deploys capital across selected instruments and actively adjusts positions based on market conditions.
Throughout the investment cycle, the manager monitors risk, rebalances the portfolio, and provides periodic reports on performance, exposure, and strategy updates.
Types of Investment Strategies Allowed Under SIFs
SEBI has permitted specific long–short strategies under SIFs, grouped into Equity-Oriented, Debt-Oriented, and Hybrid categories.
Category | Sub-Category | Features |
Equity-Oriented | Equity Long-Short Fund | Primarily invests in listed equities with limited short exposure via derivatives |
Equity Ex Top 100 Long Short Fund | Targets mid and small-cap stocks that are not part of the top 100 by market capitalization. | |
Sector Rotation Long-Short Fund | Concentrates on a maximum of four sectors, using long and short positions to take advantage of sectoral trends. | |
Debt-Oriented | Debt Long-Short Fund | Invests in fixed-income instruments and uses derivatives to position for interest rate or duration changes. |
Sectoral Debt Long Short Fund | Diversifies across debt sectors and uses sector-level shorts to capture relative value opportunities. | |
Hybrid | Active Asset Allocator Long Short Fund | Combines equity, debt, REITs/InvITs, and commodities, with tactical shorting and dynamic allocation based on market conditions. |
Hybrid Long-Short Fund | Maintains a balanced mix of equity and debt to manage risk and aim for steady returns. |
Benefits of Investing in SIFs
Specialised Investment Funds are a smart choice for seasoned investors looking to broaden their investment mix.
1. Better Diversification
SIFs allow investors to diversify across instruments, strategies, and asset classes, reducing concentration risk present in single-strategy products.
2. Flexibility in Market Conditions
Fund managers can adjust allocations as markets shift, which can help the fund perform even during volatile environments.
3. Expert-Driven Decisions
Investors gain access to research, risk models, and macro insights, benefiting from professional portfolio management.
4. Tailored Investment Approach
Each SIF aligns with investor goals, whether it’s growth, capital protection, or risk management, offering a level of customization rare in standard mutual funds.
5. Potential for Higher Returns
Active management and dynamic allocation across assets aim to generate alpha, even in uncertain or declining markets, while considering market risks.
Watch this video by Ashvvy Investments to learn more about SIFs:
Risks of Investing in SIFs
While SIFs have attractive features, investors should be aware of the risks:
1. Market Risks and Volatility
As a new SEBI-regulated asset class, SIFs invest in niche sectors and dynamic strategies, which can make them more volatile than traditional funds. They are best suited for investors with a high-risk appetite and long-term horizon.
2. Complexity of Strategies
SIFs may involve derivatives, structured credit, or alternative assets, which can be complex for new investors to fully understand.
3. Higher Minimum Investment
Though lower than PMS, ₹10 lakh is still a meaningful ticket size, which may not suit every investor’s liquidity profile.
Who Should Invest in SIFs?
SIFs are ideal for:
- High-net-worth individuals (HNI) looking for alternatives to mutual funds.
- Investors with a long-term horizon and a high-risk appetite.
- Those seeking professional management and exposure to diverse strategies and asset classes.
- Investors who want a customized approach beyond standard mutual fund options.
If you are looking for a alternate investment with flexibility and professional management, SIFs could be a suitable option.
Conclusion
Specialised Investment Funds (SIFs) provide investors with a unique opportunity to access strategy-driven, professionally managed portfolios across equity, debt, and hybrid instruments. They offer diversification, flexibility, and customization, but also carry higher risk and complexity, making them suitable for sophisticated investors.
If you want to invest in SIFs and learn more about this emerging asset class, Ashvvy Investments can help guide you with insights, strategy selection, and professional support to make better decisions.
