India's first SIFs: What's special about the funds, who should invest

The investment tool is being launched soon; it blends mutual fund oversight with hedge fund-like strategies

India’s market regulator has received the first two applications for Specialized Investment Fund (SIF) and is likely to approve them in 10 days. This will introduce India’s first SIFs under a mutual??'fund framework, offering investors a new way to pursue sophisticated strategies. “SIFs offer sophisticated investors the freedom to pursue strategies across equities, debt, derivatives, and even private assets, all within a regulated fund structure,” says Swapnil Aggarwal, director, VSRK Capital.

 

What is a SIF?

 

SIFs sit between mutual funds and more bespoke vehicles, combining disciplined oversight with strategic flexibility:

 

Flexible asset universe

 

“They can invest in private equity, real estate and derivatives — capabilities beyond traditional mutual funds,” says  Aggarwal.

 

 

Advanced investment tactics

 

“Long??'short equity, leverage, hedging and sector rotation are all on the table,” notes Nandini Pathak, partner, Bombay Law Chambers.

 

Regulatory framework

 

“SIFs must publish an Investment Strategy Information Document (ISID), detailing their strategy, risk limits and concentration norms under SEBI’s mutual??'fund rules,” says Kunal Sharma, partner at Singhania & Co.

 

SIFs compared to other vehicles

 

How SIFs Compare to Other Vehicles
Feature	Mutual Funds	PMS	AIF Cat III	SIF
Strategy Scope	Long??'only	Discretionary equity	Alternative assets	Hybrids, long??'short, leverage, derivatives
Minimum Entry	₹500–₹5,000	₹50 lakh	₹1 crore	₹10 lakh aggregate AUM per strategy
Regulation	SEBI MF Rules	SEBI PMS Guidelines	SEBI AIF Regulations	SEBI MF Framework

 

Who should invest in SIFs

 

Aggarwal, Pathak and Sharma say SIFs cater to well??'capitalised, experienced investors:

 

High??'net??'worth & accredited investors

 

“They can meet the capital threshold and withstand higher volatility,” says Aggarwal.

 

Sophisticated retail via intermediaries

 

“Once feeder or fund??'of??'fund structures launch, retail investors gain indirect access,” says Pathak.

 

Institutions & Family Offices

 

“These groups will use SIFs for tailored mandates and diversified streams,” adds Sharma.

 

Key considerations for investors

 

Risk??'return profile

 

“SIFs aim to generate alpha in both rising and falling markets, but leverage and derivatives amplify both gains and losses,” warns Aggarwal.

 

Fee structure

 

As Sharma outlines, expect a 1-2 per cent annual management fee plus a 10-20 per cent performance fee — higher than most mutual funds but aligned with PMS and AIF costs.

 

Transparency & disclosures

 

“Review the ISID carefully for details on holdings, concentration caps and liquidity terms,” advises Pathak.

 

Access Routes

 

Track AMC announcements for feeder??'fund or fund??'of??'fund launches to participate indirectly.

 

With approvals imminent, SIFs herald a new chapter in India’s investment landscape. Investors should now study product structures, weigh costs against expected returns, and plan how these sophisticated strategies can complement their existing portfolios