Specialised Investment Funds (SIF): The New Investment Category

If you have been following the latest news in finance, you may have heard about Specialised Investment Funds (SIFs). You might wonder, what sets them apart?

 

Are they good for everyone, or only for certain people? Let’s talk about SIFs in simple words, so you can understand how they work, who can invest, and whether they are a fit for your financial goals.

What is Specialised Investment Funds (SIFs)?

Specialised Investment Funds, often known as SIFs, are a new category of investment that lets investors put their money in different types of assets using a fund structure. This is different from a regular mutual fund or a portfolio management scheme (PMS).

 

SIFs give more choices and a bit more freedom to the fund managers, so the investment may grow in ways that are hard for other funds. These funds are often made for people who want more than what they usually get from mutual funds or AIFs (Alternate Investment Funds).

 

SIFs can often use special strategies or buy things that other funds can’t easily buy. This gives them advantages if the managers are skilled. But, it can also mean extra risks, if the investments do not turn out as planned.

When Has SEBI Approved SIFs?

SEBI, the main regulator in charge of investments in India, gave approval for SIFs between 1st April and 30th April 2025. This new category was not present before this period.

 

The launch is exciting since it gives professional investors and even some regular investors another way to invest.

Who Can Invest in SIFs?

You might ask, Can anyone put money in SIFs? The answer is — not everyone. Mainly, these funds are for sophisticated investors who can understand risks.

 

This includes high-net-worth individuals, big family offices, trusts, private companies, and sometimes, very rich individuals.

 

Banks, insurance firms, and other financial institutions can also put money into SIFs if they want to. But, retail investors who are just starting their investment journey may not be allowed to invest, given the rules set by SEBI.

What is the Threshold Amount? SIP Provision in SIFs?

Here is something important: There is a minimum amount you have to invest, called the threshold. For SIFs, this is higher than for mutual funds. The amount is ₹10 Lakhs, which is an initial threshold amount to start investing in an SIF.

 

This means, only people who can afford to put in a large sum of money at once are able to invest. But what if you want to make small investments every month, like a SIP (Systematic Investment Plan)?

 

Right now, SIFs do not always offer SIPs the way mutual funds do. This might change later, as the category grows and adapts. At the moment, it’s most common to invest lump sum amounts.

What Is the Investment Philosophy of SIFs?

Each SIF has its own special way of investing. Most SIFs focus on targets that might bring higher returns, but that can come with higher risk. Because SIFs are allowed to invest in many types of assets, they can choose strategies that suit changing market conditions.

 

Some funds may use unique ways, like long-short equity, private credit, private equity, or even global investments. The flexibility gives SIFs a chance to tap into themes or sectors that aren’t open for regular mutual funds or retail investors.

What’s the Time Duration of Investments?

SIFs are not like those funds where you can put in money today and take it out tomorrow. In most cases, money must stay in for several years.

 

The lock-in period varies from fund to fund, but many SIFs expect you to keep your investment for at least 3–5 years, or sometimes even longer.

 

Withdrawals before the lock-in are not easy and can sometimes mean fees. That’s why these funds suit people who are ready to leave the money invested for a long time.

Who Can Sell or Distribute SIFs?

Not every advisor or agent in the market can sell SIFs. Only those holding special licenses or registrations from SEBI are allowed to distribute SIFs. These people should know the rules and have the training to advise investors properly.

 

Before buying, make sure the distributor or advisor is authorised and understands all the risks. This adds a layer of safety, ensuring only qualified professionals are helping you with your investment.

How Are SIFs Taxed Compared to Mutual Funds, PMS, and AIFs?

Taxation can be a confusing topic. SIFs may be taxed differently from mutual funds, PMS (Portfolio Management Services), and AIFs.

In most cases, SIFs are likely taxed in line with AIF Category III structures. This means investors are taxed on the income earned from the fund, based on their own tax bracket, instead of the fund paying the tax.

 

Mutual funds usually have special rules for tax on capital gains, which can sometimes be lower if you hold them long enough. PMS may tax you based on each buy and sell. With SIFs, you need to be ready for your own tax rate to apply.

 

A good advisor or a tax expert can explain your personal situation in detail, so always ask for a professional opinion before investing.

What Types of Instruments Do SIFs Usually Invest In?

SIFs have a lot of leeway in what they can invest in, compared to traditional mutual funds or AIFs. You might see them put money in: The actual mix depends on what each fund aims to achieve, and how much risk they are willing to take.

 

This broader range allows fund managers to find different chances that might grow your wealth.

 

PMS vs Mutual Funds vs AIFs vs SIFs: How Are They Different?

Here’s a quick comparison for clarity:

Feature	Mutual Funds	PMS	AIFs	SIFs
Who invests	Most people	Richer investors	High net-worth, institutions	High net-worth, institutions
Minimum Amount	₹500	₹50 lakh	₹1 crore (Cat II/III)	₹10 lakh
Diversification	High	Moderate	High or focused	Can be very high
Control	Pooled	Individual	Pooled	Pooled
Liquidity	High	Moderate	Variable	Lower
Taxation	Special capital gains rates	Slab rate	Slab rate or pass-through	Usually slab rate
Regulations	SEBI	SEBI	SEBI	SEBI (New category)

While SIFs borrow some features from each, they carve out their own space with their range and strategies.

What Should Investors Watch Out for in SIFs?

Pros and Cons

Upsides:

●     More choice in assets and investment styles

●     Potential for higher gains

●     Ability to use unique strategies

Downsides:

●     Not as easy to get in and out of, due to long lock-in

●     Only for investors with significant money and risk understanding

●     Tax rules can be different and sometimes higher

●     May need more due diligence on the platform and advisor

Summary

Specialised Investment Funds (SIFs) are a new SEBI-approved investment category starting April 2025. SIFs permit more investment choices, different styles, and higher entry barriers.

 

They suit experienced investors who are able to leave their money for a long time, face more risks, and seek more than ordinary returns. Always check every feature, read the offer document, and consult your financial advisor before making a move.

Frequently Asked Questions

Q1. Can anyone invest in SIFs? No, only certain investors who can meet the minimum threshold are allowed.

Q2. How are SIFs different from mutual funds? SIFs invest in more types of assets, often have higher risks, and need bigger investments.

Q3. Is my money locked up for years? Usually yes. Most SIFs ask you to keep your money for long periods.

Q4. Are SIFs safer than PMS or AIFs? Safety depends on many things like strategy, manager skill, and risk. They are not always safer.

Q5. How are SIFs taxed? Tax is usually based on your personal tax rate, but always check before investing.

 

Disclaimer: This article is solely for informational purposes; full details on SIFs will be available when they are officially open and launched in the market for investor subscription. Readers are advised to consult their financial advisors and do all due diligence regarding suitability based on their risk profiling, time horizon, taxation, and return expectations, before making any decision.