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Investing

Specialised Investment Funds (SIF): Rules, Minimum and Tax

A SIF is a SEBI-regulated product run by mutual fund houses. It needs at least ₹10 lakh per PAN and may take short positions of up to 25%.

AI

Written by Ananya Iyer

Published 11 October 2026·7 min read

On this page8 sections
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A Specialised Investment Fund (SIF) is a SEBI-regulated product that only mutual fund houses can offer. You must invest at least ₹10 lakh across a fund house’s SIF strategies, counted at PAN level. In return, the fund can take unhedged short positions through derivatives of up to 25% of its net assets, which ordinary mutual funds cannot do.

Key facts

Item Rule
Regulator and law SEBI; Chapter IX of the SEBI (Mutual Funds) Regulations, 2026
Framework in force since 1 April 2025
Minimum investment ₹10 lakh per PAN across all strategies of one SIF
Exempt from minimum Accredited investors; mandatory investments by AMC staff
Unhedged short exposure Up to 25% of net assets, through exchange-traded derivatives
Strategy types allowed 7 (3 equity, 2 debt, 2 hybrid), one of each per SIF
Redemption notice period Up to 15 working days, if the AMC sets one
Industry size 33 strategies, ₹31,175 crore of assets, 1,25,539 folios on 31 August 2026 (AMFI)

What a SIF is and who offers it

SEBI created the SIF to fill the gap between mutual funds and portfolio management services (PMS). The framework came through an amendment to the old 1996 mutual fund regulations and a circular dated 27 February 2025. It took effect on 1 April 2025. The SEBI (Mutual Funds) Regulations, 2026 replaced the 1996 rules from 1 April 2026 and carry the SIF over in Chapter IX.

Legally, each SIF strategy is a mutual fund scheme, and the usual mutual fund rules apply unless Chapter IX says otherwise. A fund house needs SEBI’s approval to launch a SIF. It can qualify in one of two ways:

  • Track record route: the mutual fund has run for at least 3 years with average assets of at least ₹10,000 crore over those 3 years.
  • Alternate route: it appoints a chief investment officer with at least 10 years of fund management experience and ₹5,000 crore average assets managed. It also needs a second fund manager with 3 years of experience and ₹500 crore managed.

In either case, SEBI must not have acted against the sponsor or AMC in the last 3 years. The SIF must carry its own brand name, logo and website. It can say “offered by” the parent mutual fund for the first five years.

Minimum investment and who is exempt

The ₹10 lakh floor counts only your SIF holdings with that fund house. Your regular mutual fund holdings with the same AMC do not count towards it. Once you have met the threshold, the AMC may offer SIPs, SWPs and STPs.

Two groups are exempt:

  • Accredited investors. For individuals, SEBI’s framework requires annual income of at least ₹2 crore, or net worth of at least ₹7.5 crore with half in financial assets. Annual income of ₹1 crore plus net worth of ₹5 crore, with half in financial assets, also qualifies.
  • AMC employees making the mandatory investments that mutual fund rules require of them.

What happens if you fall below ₹10 lakh

A fall in NAV is a “passive breach” and is not a violation. You may then only redeem your entire remaining holding. A fall caused by your own redemption, transfer or sale is an “active breach”. The rules from SEBI’s July 2025 circular are:

  1. All your units across the SIF’s strategies are frozen for debit.
  2. You get a 30-calendar-day notice to top up to ₹10 lakh.
  3. If you top up in time, the freeze is lifted.
  4. If you do not, the AMC redeems the frozen units at the NAV of the next business day after the 30th day.

Allowed strategies and exposure limits

Each strategy can hold up to 25% of net assets in unhedged derivative positions, over and above positions taken for hedging and rebalancing. Total gross exposure cannot exceed 100% of net assets.

Strategy Main rule Minimum redemption frequency
Equity Long-Short At least 80% in equity Daily
Equity Ex-Top 100 Long-Short At least 65% in stocks outside the top 100 by market value Daily
Sector Rotation Long-Short At least 80% in equity of up to 4 sectors Daily
Debt Long-Short Debt across durations Weekly
Sectoral Debt Long-Short Debt of at least 2 sectors, up to 75% in one Weekly
Active Asset Allocator Long-Short Equity, debt, derivatives, REITs, InvITs, commodity derivatives Twice a week
Hybrid Long-Short At least 25% in equity and 25% in debt Twice a week

A strategy may offer redemptions less often than these frequencies if the AMC chooses. At the end of August 2026, no debt strategy had been launched. Hybrid Long-Short held the most money, at ₹19,669.50 crore across 11 strategies, according to AMFI.

Debt holdings face single-issuer limits of 20% of NAV for AAA paper, 16% for AA, and 12% for A and below. No more than 25% of NAV can sit in debt of one sector.

How a SIF differs from mutual funds and PMS

Feature Mutual fund SIF PMS
Minimum investment Set by each scheme ₹10 lakh ₹50 lakh
Unhedged short positions Not allowed Up to 25% of net assets Depends on the mandate
Structure Pooled scheme Pooled scheme under a separate brand Individual portfolio in your name
Portfolio disclosure Public, as SEBI specifies Public, every alternate month Reported to you by the manager
Risk label Riskometer Risk-band, levels 1 to 5 None in this form

Minimums for PMS (₹50 lakh) and most AIFs (₹1 crore) are as listed by Kotak Mutual Fund. Our PMS and AIF guide covers those products. To sell SIFs, a distributor must also pass the NISM Series-XIII common derivatives exam.

Every SIF advertisement must carry this warning: “Investments in Specialized Investment Fund involves relatively higher risk including potential loss of capital, liquidity risk and market volatility.”

Redemption terms and tax

Each strategy discloses its subscription and redemption frequency, and the two can differ. For example, a strategy may take money daily but pay out weekly. If the AMC sets a notice period, you get the NAV at the end of that period, and the period cannot exceed 15 working days. Any strategy that does not redeem daily counts as an interval strategy. Interval and close-ended strategies must be listed on a stock exchange, so you can sell units there.

SIF strategies are mutual fund schemes, so mutual fund tax rules apply according to what each strategy holds. For tax year 2026-27 under the Income-tax Act, 2025, the broad rules are:

Type of fund Short-term Long-term
Equity-oriented (at least 65% in listed Indian shares) 20% if held up to 12 months 12.5% above ₹1.25 lakh, after 12 months
Specified funds (more than 65% in debt) Slab rate, whatever the holding period Not applicable
Other funds Slab rate 12.5% after 12 months (listed) or 24 months (unlisted)

Surcharge and 4% cess are added. Whether a long-short or hybrid strategy counts as equity-oriented depends on its actual holdings, so check the tax section of its information document. Our mutual fund taxation page covers the general rules. For a large or complex portfolio, a tax adviser can confirm how a given strategy will be taxed.

Frequently asked questions

What is the minimum investment in a SIF?

₹10 lakh, added up across all strategies of the same SIF under your PAN. Accredited investors are exempt.

Can I start a SIP in a SIF?

Yes, if the AMC offers it, but your total SIF investment with that fund house must still meet the ₹10 lakh threshold.

Is a SIF a mutual fund?

Legally yes. Each SIF strategy is a mutual fund scheme under Chapter IX of the SEBI (Mutual Funds) Regulations, 2026, but it must use a brand separate from the parent fund.

How much can a SIF short?

Up to 25% of net assets through unhedged positions in exchange-traded derivatives, on top of hedging positions.

What if my SIF value falls below ₹10 lakh?

If the NAV fell, you can stay invested but may only redeem everything. If you redeemed or sold below the threshold, your units are frozen and you get 30 days to top up.

How is a SIF taxed?

Like a mutual fund scheme with the same asset mix. Equity-oriented strategies pay 20% short-term and 12.5% long-term tax; debt-heavy ones are taxed at slab rates.

Is a SIF safer than PMS?

Neither is guaranteed. A SIF follows mutual fund rules on disclosure and diversification, but SEBI requires a warning that it carries higher risk, including loss of capital.

Sources

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