SIFs Explained: Why India’s Smart Money Is Moving Beyond Mutual Funds

Gabriela Galeena
Jan 16
4 min read

Updated: Jan 16

If you’ve been following the markets lately, you may have noticed a new acronym quietly stealing the spotlight, the SIF's.

And it’s not just industry chatter. Specialised Investment Funds (SIFs), launched in mid-September 2025 for investors with a high risk appetite, have already clocked 20,779 investor folios by the end of December, according to data from AMFI. That’s a big jump in a very short time.

The money is moving just as fast. Assets under management (AUM) in SIFs rose from ₹2,010.44 crore at the end of October to ₹4,892.32 crore by December. In fact, since October, the number of folios has more than doubled. Even more telling: seven SIF schemes launched by the end of 2025 raised ₹409 crore, compared with an average of ₹204 crore raised by 56 traditional mutual fund NFOs during the same period, according to Financial Express.

So what’s driving this sudden interest? Let’s break it down - simply and clearly.

What exactly is an SIF?

Think of a Specialised Investment Fund (SIF) as the middle ground India’s investors didn’t know they were missing.

Introduced by the Securities and Exchange Board of India (SEBI) under the mutual fund framework, SIFs sit between traditional mutual funds and high-ticket products like PMS or AIFs.

In simple terms:

Mutual funds are simple, liquid, and widely accessible
PMS and AIFs are flexible and sophisticated, but expensive and exclusive

SIFs combine the best of both worlds. They allow fund managers to run strategy-driven portfolios like long-short equity, sector rotation, or hybrid tactical strategies while still operating under mutual-fund-level regulation and transparency.

Why did SEBI feel the need to introduce SIF?

Because investors had a problem...

Regular mutual funds are great, but they’re mostly long-only and don’t always handle volatile or sideways markets well. On the other hand, PMS and AIFs offer advanced strategies, but with ₹50 Lakh and ₹1 crore minimum investments, respectively, and with lower transparency.

SEBI’s solution? Create a regulated product that:

Allows greater portfolio flexibility
Comes with clear risk disclosures
Keeps entry selective, but reasonable, at ₹10 lakh
Prevents “grey-area” products from operating outside oversight

That’s how SIFs were born.

How do SIFs actually work?

At the surface, SIFs look like mutual funds. But under the hood, they have far more freedom.

Here are the key things investors should know:

Minimum investment: ₹10 lakh per investor (PAN level) across all SIF strategies of a single AMC
Who can launch them: Only SEBI-registered mutual fund houses
Short selling: Allowed - up to 25% of net assets using unhedged derivatives
Structure: Open-ended or interval funds
Liquidity: Can be daily, weekly, or periodic, depending on the strategy
Risk labelling: Mandatory disclosure across five risk bands (1–5)

Yes, you can even use SIP, SWP, or STP, as long as your total investment adds up to ₹10 lakh (unless you’re an accredited investor).

What kind of strategies do SIFs run?

This is where things get interesting.

SEBI has allowed a clearly defined set of strategies, broadly split into three buckets:

Equity-focused SIFs

These include:

Equity long-short funds
Equity ex-Top 100 long-short funds
Sector rotation long-short funds

They typically maintain 65-80% equity exposure, while using short positions (up to 25%) to manage risk or generate returns.

Debt-focused SIFs

These funds play interest-rate cycles and sectoral opportunities using:

Debt long-short funds
Sectoral debt long-short funds

They’re designed for investors who want more active fixed-income management.

Hybrid SIFs

These mix it all:

Equity, debt, derivatives
REITs, InvITs, and commodity derivatives

The idea is simple: shift money dynamically based on where opportunities look best.

Why are investors warming up to SIFs so quickly?

Because markets have changed, and investors know it.

Here’s what’s clicking:

Access to long-short and hedged strategies is not available in regular mutual funds
Ability to perform in volatile, range-bound, or falling markets, not just bull runs
Better portfolio diversification
A ₹10 lakh entry point, instead of ₹1 crore for AIFs or 50 lakhs for PMS.
Strong governance, disclosures, and SEBI oversight

No surprise then that fund houses and investors alike are watching this space closely.

But how different are SIFs from regular mutual funds?

Very, and that’s the point.

Feature	SIFs	Mutual Funds
Minimum investment	₹10 lakh	₹100–₹500
Investor Type	Sophisticated / HNIs	Retail investors
Strategy flexibility	High	Limited
Short selling	Allowed (up to 25%)	Not allowed
Liquidity	Moderate	High
Risk	Higher	Depends on category

Simply put, SIFs give up simplicity for strategy.

Are there risks? Absolutely.

SIFs aren’t casual investments.

They can be more volatile
Liquidity may be limited
Performance depends heavily on the fund manager's skill
They’re not ideal for short-term or conservative investors

SEBI has made sure the risks are clearly disclosed, but understanding them is still the investor’s job.

The takeaway

The early numbers say it all. With ₹4,892.32 crore in AUM, 20,779 folios, and rising interest from major AMCs, Specialised Investment Funds are no longer niche experiments; they’re becoming a serious part of India’s investment conversation.

They’re not for everyone. But for investors who understand markets, can commit ₹10 lakh or more, and are looking for smarter diversification, SIFs could turn out to be one of the most important additions to portfolios in the years ahead.

Disclaimer: This content is for educational purposes only; please conduct your own research and consult a qualified investment advisor before making investment decisions.