SEBI has recently introduced a new investment category — Specialized Investment Funds (SIF) to bridge the gap between Mutual Funds and Portfolio Management Services (PMS). This move is aimed at providing greater flexibility to investors who want advanced investment strategies but without the complexities of PMS.
A SIF is a new type of investment product designed to offer sophisticated investment strategies like long-short equity, sector rotation, and hybrid asset allocation. These funds provide a middle ground between the strict structure of mutual funds and the more flexible but high-ticket PMS. SEBI has set April 1, 2025, as the official launch date for SIFs.
Unlike regular mutual funds, which allow investment with as little as ₹100, SIFs have a minimum investment requirement of ₹10 lakh per investor. If you are a retail investor looking to experiment with SIFs, you need to ensure that your total investments across different SIF strategies meet this threshold.
- SIFs allow fund managers to use derivatives and other strategies to enhance returns.
- Mutual funds mostly bet on buying stocks (in Cash), but SIFs will allow fund mangers to go long and short on the stocks using derivatives.
- Because SIFs involve derivatives, they carry higher risk than regular mutual funds but can offer superior returns.
Basically they are AIF Cat 3 - introduced for the retail participants.