India's investment landscape changed in April 2025.
SEBI created a new category - sitting between mutual funds and PMS - that most investors still haven't heard of.
₹9,711 crore has already moved in. In just 5 months from launch to February 2026.
The Gap SEBI Was Trying to Fill
India had two ends of the investment spectrum.
On one end: Mutual Funds - accessible, SEBI-regulated, starting at ₹500. But limited to long-only strategies. No short selling. No derivatives beyond hedging.
On the other end: PMS and AIF - sophisticated strategies, experienced managers, but requiring ₹50 lakh minimum (PMS) or ₹1 crore (AIF). Out of reach for most HNIs.
The gap in the middle - for the serious investor with ₹10–50 lakh who wants something more than a mutual fund - was empty.
SIF fills that gap.
What SIF Actually Is
Specialized Investment Fund (SIF) is a SEBI-regulated investment category under the Mutual Fund framework, launched in April 2025 via the SEBI (Mutual Funds) Amendment Regulations, 2024.
Key facts:
• Minimum investment: ₹10 lakh per AMC per PAN
• Regulation: SEBI - same framework as mutual funds
• NAV: Published daily, like a mutual fund
• Strategy: Long-short using equity, derivatives, debt, and arbitrage
• Short selling: Allowed up to 25% of net assets (not permitted in regular MFs)
• Who can offer: Only AMCs with 3+ years track record and ₹10,000 crore+ average AUM
• Who can distribute: Only NISM Series XIII certified distributors
Understanding Gross vs Net Equity Exposure
Before going further, one distinction matters a lot in SIF - and it's almost never explained properly.
Gross equity exposure is the total value of all equity positions a fund holds - both unhedged (directional bets) and hedged (e.g. cash-futures arbitrage). SEBI uses this number to classify a fund's tax treatment.
Net equity exposure is what remains after subtracting hedged positions. It reflects the fund's actual directional market risk - how much the portfolio moves with the Nifty.
Example: A SIF holds 65% in equity (of which 40% is hedged via arbitrage) and 35% in debt. Gross equity = 65% → qualifies as equity-oriented for tax. Net equity = 25% → the fund actually behaves conservatively.
This is why some Hybrid Long-Short SIFs can hold "65% equity" on paper and still act like a conservative income fund. The hedge removes the directional risk while preserving the tax classification.
The Long-Short Advantage
The most important feature of SIF - and the least understood - is the ability to go short.
In a regular mutual fund, if the fund manager believes a stock is overvalued, they can only reduce their position. They cannot profit from the decline.
In a SIF, the fund manager can actively short that stock - profiting when it falls, or at minimum, hedging the portfolio against the decline.
This means:
• In a rising market → long positions generate returns
• In a falling market → short positions provide protection or profit
• In a sideways market → arbitrage and derivatives generate income
The Nifty 50 is down 4.12% over the last 12 months. In that environment, a long-short fund has more tools than a long-only fund.
How SIF Compares to Everything Else
|
Feature |
Mutual Fund |
SIF |
PMS |
AIF Cat III |
|
Minimum investment |
₹500 |
₹10 lakh |
₹50 lakh |
₹1 crore |
|
Short selling |
✗ No |
✓ Up to 25% |
✓ Yes |
✓ Yes |
|
SEBI regulated |
✓ Yes |
✓ Yes |
✓ Yes |
✓ Yes |
|
Daily NAV |
✓ Yes |
✓ Yes |
✗ No |
✗ No |
|
Tax at fund level |
Nil |
Nil |
Nil |
Up to max marginal rate |
|
Typical min horizon |
Flexible |
1–3 years |
3+ years |
3–5 years |
The SIF's unique position: PMS-style strategies at mutual fund-level transparency and regulation, at ₹10 lakh.
The Numbers So Far
SIF launched in September 2025 with the first fund from SBI Mutual Fund.
By February 2026:
• 27 SIF funds across 13 AMCs now live
• ₹9,711 crore AUM - up from ₹2,010 crore in October 2025
• ~84% of SIF assets in Hybrid Long-Short strategies
• Less than 2% of MFDs are SIF-certified - significant early-mover window
The category is still in its infancy - less than 0.02% of India's total mutual fund AUM of ₹82 trillion. The runway ahead is enormous.
Who Should Consider SIF
• Have ₹10 lakh or more to invest in a single AMC
• Understand that returns are not guaranteed
• Have a minimum 1–2 year time horizon
• Want more sophisticated strategies than a standard mutual fund
• Are comfortable with NAV-based instruments
SIF is not suitable for first-time investors, those needing
short-term liquidity, or anyone uncomfortable with market-linked returns.
Now that you understand the structure, explore the top SIF funds available in India right now - with live NAVs and side-by-side comparison across all 5 SEBI categories.
Dwipa Shah | AND Fintech
NISM Certified: Series 5A (MF) · Series 21A (PMS) · Series 19A (AIF) · Series XIII (SIF)
ARN-301536 | https://andfintech.in/sif