Designed to cater to high-net-worth individuals (HNIs) and accredited investors, this innovative framework offers investment opportunities of a minimum of Rs 10 lakh that are more flexible than traditional Mutual Funds (MFs) but operating under a structured regulatory framework as in Portfolio Management Services (PMSes) which has a minimum ticket size of Rs 50 lakh.

What Are SIFs?

SIFs, introduced under Chapter VI-C of SEBI Mutual Fund Regulations, allow mutual funds to create specialized schemes tailored to specific investment strategies. With a minimum investment requirement of Rs 10 lakh, these funds target investors seeking exposure to niche markets and sophisticated strategies typically unavailable through standard MF products.

Key Features and Investment Rules

SIFs operate with clear boundaries to balance flexibility and safety. They can invest in diverse asset classes, including equity, debt, and alternatives while adhering to SEBI's risk mitigation guidelines. For example:

Investments in debt from a single issuer are capped at 20% of the fund's net assets (extendable to 25% with trustee approval). Ownership in a company’s equity or voting rights is restricted to 15%.

SIF schemes can be open-ended, close-ended, or interval-based, offering investors clarity on subscription and redemption options. Accredited investors enjoy additional flexibility, such as exemption from minimum investment thresholds, making SIFs particularly appealing to this group.

Market Impact

SIFs are positioned as a distinct product offering. This move by SEBI is expected to diversify India’s investment ecosystem, encouraging fund houses to design advanced products for sophisticated investors and boosting market innovation. SIFs are not a direct hybrid but a distinct category offering unique features that, some could argue, fill the gap between MFs and PMSes.

Read the official document here.