Specialised Investment Funds (SIF) — SEBI's New Framework Sitting Between Mutual Funds and PMS
For years, Indian investors with ₹10–50 lakh to deploy faced an odd gap: too much for a plain mutual fund to feel purpose-built for them, not enough to comfortably clear a Portfolio Management Service's ₹50 lakh minimum. SEBI's Specialised Investment Fund (SIF) framework, effective April 1, 2025, was built to close that gap — and it has created an entirely new compliance and structuring workstream for AMCs.
What a SIF Actually Is
An SIF is not a new type of entity — it's a new class of "Investment Strategy" launched by an existing SEBI-registered mutual fund, operating under a relaxed set of rules compared to a traditional scheme, while still sitting within the regulatory perimeter of the SEBI (Mutual Funds) Regulations, 1996 (via a new Chapter dealing specifically with SIFs). It bridges the flexibility gap between a plain mutual fund and a PMS by permitting derivatives use, long-short positioning, and features simply not available in a conventional scheme.
Who Can Launch One — Two Eligibility Routes
Route 1 — Sound Track Record: The mutual fund must have been operational for at least three years, with an average AUM of not less than ₹10,000 crore over the preceding three years, and no action initiated or taken against the sponsor/AMC under Sections 11, 11B, or 24 of the SEBI Act during that period.
Route 2 — Alternate (CIO/Fund Manager Experience) Route: The AMC appoints a Chief Investment Officer for the SIF business with at least 10 years of fund management experience and a track record of managing an average AUM of at least ₹5,000 crore, plus an additional fund manager with at least 3 years of experience managing an average AUM of at least ₹500 crore — again with a clean regulatory record on the sponsor/AMC side.
The ₹10 Lakh Minimum Investment Threshold
Every investor must maintain a minimum aggregate investment of ₹10 lakh across all SIF strategies of a given fund house, tracked at the PAN level — this requirement doesn't apply to accredited investors. If an investor's holding falls below this threshold purely due to market movement (a "passive breach"), they're generally permitted to redeem only the full remaining balance rather than continue partial transactions, until the threshold is restored.
What Makes SIF Genuinely Different From a Mutual Fund
- Permitted use of derivatives for strategies like equity long-short, with defined short-exposure caps.
- Performance-linked fee structures, not available to conventional mutual fund schemes.
- Distinct governance — SIFs require a genuinely separate brand, logo, and website presence from the parent AMC's mutual fund business.
- Flexible subscription/redemption frequency that can vary by strategy (daily, weekly, monthly, or interval-based).
Why This Matters for AMCs Considering Entry
Launching an SIF is not a scheme filing exercise — it's a distinct regulatory approval process requiring the AMC to demonstrate eligibility under one of the two routes, build separate governance and branding infrastructure, and operate under instrument-level concentration limits distinct from ordinary MF regulations (including specific single-issuer and sector-level debt exposure caps). For AMCs evaluating whether to enter this space, the eligibility assessment itself is the first real compliance decision point.
How Anuj Desai & Associates Can Help
We assist AMCs in assessing SIF eligibility under both routes, structuring the application, and building out the compliance framework SEBI expects — including the branding separation, governance documentation, and instrument-level concentration monitoring this new category demands. If your AMC is evaluating an SIF launch, we can help you map the eligibility path and compliance build-out from day one.
+91 96194 56656 | office@anujdesaiassociates.com | anujdesaiassociates.com