Author: Kunal sharma, Xim University, Bhubaneswar
Navigating the investment world can feel like choosing between a safe but predictable path and a thrilling but riskier adventure. Mutual funds offer security and diversification but often limit your options. Portfolio Management Services (PMS) provide tailored strategies but demand a hefty ₹50 lakh minimum and come with lighter regulation. Enter Specialized Investment Funds (SIFs), a game-changing initiative by the Securities and Exchange Board of India (SEBI) launched in 2025. Designed for sophisticated investors, SIFs blend the flexibility of PMS with the regulatory safety of mutual funds, all at a more accessible ₹10 lakh entry point. This article explores what SIFs are, why they were introduced, their requirements, the regulatory framework, and their competitive positioning in India’s evolving investment landscape.
What Are SIFs?
Specialized Investment Funds are a new category of investment vehicles that allow asset management companies (AMCs) to offer advanced strategies to investors with a minimum investment of ₹10 lakh. Unlike traditional mutual funds, which stick to standard equity or debt portfolios, SIFs can include sophisticated options like real estate investment trusts (REITs), derivatives, and hybrid long-short strategies. Regulated by SEBI, SIFs provide the oversight you’d expect from mutual funds while offering the flexibility typically found in PMS. The framework for SIFs was established through amendments to the SEBI (Mutual Funds) Regulations, 1996, effective April 1, 2025.
Why Were SIFs Introduced?
The Indian investment market has long needed a product that bridges the gap between mutual funds and PMS. Mutual funds, while popular for their diversification and regulation, often restrict AMCs to conservative strategies, limiting innovation. PMS, catering to high-net-worth individuals, offers bespoke portfolios but requires a ₹50 lakh minimum and operates with less regulatory scrutiny. This left many investors-those with substantial but not ultra-high capital-searching for a middle ground.
SEBI introduced SIFs to meet this demand, providing an alternative that combines flexibility with robust oversight. SIFs align with SEBI’s segmented, risk-based regulatory approach, tailoring rules to investment size, investor profile, and product complexity. By lowering the entry barrier to ₹10 lakh, SIFs make sophisticated strategies accessible to a broader group of high-net-worth individuals and institutional investors, fostering market growth while prioritizing investor protection.
