Specialised Investment Funds (SIFs) are emerging as a new investment option for investors seeking more than traditional mutual funds, without moving fully into Portfolio Management Services (PMS). Introduced by SEBI in 2025, SIFs are positioned as a middle ground—offering greater strategy flexibility with a lower entry threshold.
While operating within SEBI’s regulatory framework, SIF investment structures allow access to advanced, strategy-driven approaches that were earlier limited to PMS or alternative funds. This has brought SIFs into focus for investors evaluating where and how to allocate capital more strategically.
But just because SIFs are becoming popular, does this mean you should invest in them? That’s what we find out in this article. We assess what are SIFs, who should consider them, and what are the factors to review before investing in detail.
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What are SIFs?
SEBI-regulated specialised investment funds or SIFs are investment vehicles that follow strategy-specific approaches such as long-short equity, sector rotation, and tactical asset allocation.
While SEBI regulates SIFs under the mutual fund framework, these funds operate differently. Traditional MFs use long-only strategies and can use derivatives only to hedge their positions. But SIFs, on the other hand, can take active short positions with the goal of generating returns in both rising and falling markets.
Depending on the scheme structure, SIF investment options may be open-ended or interval funds with defined liquidity terms. Managed by SEBI-regulated AMCs, SIFs combine flexibility with oversight, making them suitable for experienced investors exploring 10 lakh investment ideas beyond conventional mutual funds.
Should you invest in SIFs: What you should know?
If you’re thinking about making a Rs. 10 lakh lump-sum investment in SIFs, you should first understand these aspects of SIF investments properly:
1. Minimum Investment Limit
Firstly, SIF investments are more accessible than PMS investments (which start from Rs. 50 lakhs) and AIF investments (which start from Rs. 1 Cr). For SIF investments, the minimum investment limit is set at Rs. 10 lakh.
But this is not like making a Rs. 10 lakh investment in mutual funds. SIFs use advanced investment approaches that often come with higher risk exposure (due to unhedged derivatives) than traditional MFs. That’s why they are intentionally designed with a higher minimum investment threshold than MFs to ensure investor suitability.
So, if you’re looking for an investment plan for Rs. 10 Lakhs that offers you more flexibility than conventional MFs and have the required knowledge and risk appetite, then SIFs may be worth considering.
2. SIF Strategies allowed by SEBI
Next, you also need to know that not all SIFs are the same. SIFs fall into the following categories:
Equity
Debt
Hybrid
Even within these broad categories, SIF investment schemes can tailor their investment approaches to their objectives and structures.
Here’s a quick overview of the SEBI-approved investment structure for different types of SIFs:
| Category | Strategy Name | Minimum Investment Exposure | Permitted Short Exposure | Redemption Frequency* |
| Equity-Oriented | Equity Long-Short Fund | ≥80% in equity and equity-related instruments | Up to 25% via unhedged derivatives | Daily or lower |
| Equity-Oriented | Equity Ex-Top 100 Long-Short Fund | ≥65% in equity and equity-related instruments excluding-top-100 equity stocks by market cap | Up to 25% via unhedged derivatives (non-large caps) | Daily or lower |
| Equity-Oriented | Sector Rotation Long-Short Fund | ≥80% in equity and equity related instruments across the maximum four sectors | Up to 25% via unhedged derivatives | Daily or lower |
| Debt-Oriented | Debt Long-Short Fund | Debt instruments across durations | Short exposure via exchange-traded debt derivatives | Weekly or lower |
| Debt-Oriented | Sectoral Debt Long-Short Fund | Debt instruments in at least 2 sectors (maximum of 75% in a single sector) | Up to 25% via unhedged debt derivatives | Weekly or lower |
| Hybrid | Active Asset Allocator Long-Short Fund | Equity, debt, REITs, InvITs, commodity derivatives | Up to 25% via unhedged derivatives | Twice weekly or lower |
| Hybrid | Hybrid Long-Short Fund | At least 25% equity and equity related instruments and at least 25% debt instruments | Up to 25% via unhedged derivatives | Twice weekly or lower |
3. Liquidity in SIFs
Unlike mutual funds that allow daily redemptions at prevailing NAV, liquidity in specialised investment funds may be limited. Liquidity or redemption frequency depends on the SIF’s structure and strategy. Some SIFs may offer daily redemptions, while others allow withdrawals only at fixed intervals.
Here are a few liquidity considerations to keep in mind:
Exit flexibility varies across SIF strategies
Redemption frequency may be daily, weekly, monthly, or quarterly depending upon strategy
Some SIFs require an advance redemption notice (of up to 15 working days)
So if you’re considering SIF as a part of your Rs.10 lakh investment idea, remember to assess your liquidity requirements as well. For those who need (or anticipate needing) cash urgently, SIFs may not be well-suited.
4. Portfolio Fit
Before investing in any Rs. 10 lakh investment plan, it’s important to understand how the plan fits into your existing portfolio. For instance, since SIFs can take active short positions, they may carry more risks than conventional MFs. This means, they may be better suited as satellite allocations, rather than core holdings in one’s portfolio.
So, how do you know about the portfolio fit of SIF investment plans? It’s simple. You ask yourself these key portfolio-fit questions:
What percentage of my portfolio should this represent?
Do I already have adequate exposure to traditional strategies?
Am I comfortable with periods of underperformance versus long-only funds?
Do I understand that short positions can amplify losses if wrong?
Answering these questions honestly can help determine whether a SIF investment aligns with your risk appetite and long-term objectives.
5. Risks Associated with SIFs
If you are confused between an Rs. 10 lakh investment in mutual funds and Rs. 10 lakh investment in SIFs, know that the risk quotient in both varies. MFs can invest in derivative positions for hedging. But SIFs are allowed to take up to 25% unhedged derivative positions, as per SEBI.
While this long-short approach may help potentially manage downside risk, it is riskier than long-only MFs. Here are some of the key risks associated with specialised investment funds you should remember:
Use of leverage, derivatives, and short positions introduces strategy-specific risks
Limited liquidity in certain strategies
No adequate track record, as this is a newly launched investment product
Just like MFs have to use a pictorial riskometer to show their potential risks, SIFs, too, have to use ‘risk band’ to depict their associated risks. As per SEBI, these risk bands are graded on a level 1 to level 5 scale, with 1 being the lowest risk and 5 being the highest risk.
So, remember to carefully review the Investment strategy offer document to assess this risk band and ensure it aligns with your risk appetite before investing in a specialised investment fund.
MFs vs. PMS vs. AIFs vs. SIFs
Here’s a quick overview of how SIF investments compare to other alternatives like mutual funds, PMS, and AIFs:
| Product | Strategy | Minimum Investment | Transparency | Liquidity | Cost Structure | Track Record |
| Mutual Funds (MFs) | Primarily long-only; limited cash or hedging flexibility | Rs. 500 (Varies depending on the scheme) | High | High (Daily redemption) | Low expense ratios | Long, well-established performance history |
| Portfolio Management Services (PMS) | Long-only portfolios with selective hedging | ₹50 lakh | Moderate | Limited; exits depend on market liquidity | Higher fees, often performance-linked | Mixed; outcomes depend heavily on the manager's skill |
| Category III AIFs | Long and short strategies using derivatives | ₹1 crore | Low | Depends on whether the fund is open-ended or closed-ended | High management and performance fees | Inconsistent across strategies and cycles |
| Specialised Investment Funds (SIFs) | Long and short positions; tactical and hedging strategies | ₹10 lakh | Moderate | Depends on the scheme | Low–Moderate compared to PMS/AIFs | Emerging |
Who may consider investing in SIFs?
SIF investment may be more suitable for investors who:
Are exploring advanced ₹10 lakh investment ideas and can commit the capital
Have a clear understanding of strategy-led and non-traditional investments
Are HNIs or institutional investors seeking options beyond conventional mutual funds
Are comfortable with periods of volatility and variable liquidity
Have long-term capital available for deployment
Prefer diversification driven by defined investment strategies
Who may avoid SIFs?
SIFs may not be suitable for investors who:
Are first-time investors with a limited understanding of market dynamics
Have low risk tolerance and are uncomfortable with short-term volatility
Require high liquidity or frequent access to invested capital
Have smaller portfolios where SIF exposure may outweigh allocations, increasing potential risks
Prefer simple, long-only investment approaches
Bottom Line: Should you dive into SIFs?
Specialised Investment Funds are still evolving, and their strategy-driven nature, especially the use of derivatives, adds a layer of complexity. While new investment products often attract attention and excitement, that alone isn’t a reason to participate immediately. It’s important to take time to understand how these funds operate, how they perform across market cycles, and whether they truly fit your financial goals.
So, if you have Rs.10 Lakhs and don’t know where to invest, first check your investment goals, time horizon, liquidity needs, and risk appetite. Reviewing these factors will automatically help you narrow down your preferred investment vehicles.
Disclaimer
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This communication is a part of the investor education and awareness initiative of Tata Mutual Fund.
Investments in Specialized Investment Fund involve relatively higher risk, including potential loss of capital, liquidity risk, and market volatility. Please read all investment strategy related documents carefully before making the investment decision.
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
