What is a SIF Specialized Investment Fund Benefits, Taxation India

SEBI has launched a new category of mutual funds. SIF (Specialized Investment Fund) starting 1st April 2025, designed for Wealthy, Sophisticated Investors who want to go beyond the traditional mutual fund universe. Think of it as the Premium version Of The Mutual Fund, Offering Access to Complex Strategies Like Derivatives, Short Selling, Structured Products, And More, But With a Mutual fund-like taxation and Regulatory Structure.

Minimum Investment Requirement

• Minimum Investment: 10 LAKH per PAN card
• Can be Split Across Multiple SIF Schemes
• You Can Invest 3 Lakh in one SIF, 4 LAKH in another, and 3 LAKH Elsewhere, but the total must remain 10 Lakh
• SIPs allowed, but the cumulative total must maintain the 10 lakh threshold.

Regulatory Safeguards by SEBI

• Only AMC With:
• 10000 Cr AUM ( + 3 years ) OR
• CIO With 5000 Cr AUM + 10 Years Expernence
• Risk-o-Meter System
• 5 Levels – Low to Very High
• Updated monthly &disclosed on AMC + AMFI Website

Liquidity Rules – How SIFs Differ from Mutual Funds

• No Daily Redemption
• This ensures liquidity control for high-risk portfolios.
• AMC { FUND HOUSE } can define withdrawal frequency:

✨ Unique Features of SIFs

Use of Derivatives & Leverage

• SIFs can use unhedged derivatives up to 25% of the corpus.
• Naked short selling allowed – speculate without owning the stock.
• Options limit – 20% corpus { one premium, not notional value}
• For Example 20 CR Premium may have 100 CR exposure, with potential 2x leverage

Taxation of SIFs

Portfolio Type	Tax type
Equity >65%	15% STCG, 10% LTCG
Equity 35% – 65%	Slab STCG, 20% with indexation (LTCG 2 years)
Debt >65%	Slab Rate

Tax-efficient alternative to Category III AIFs, which attract up to 39% tax on trading income.

Debt-Oriented Strategies

Debt Long-short:

• Across maturities with interest rate derivatives
• 25% short position via debt derivatives

Sectoral Debt Long Short:

• Exposure to 2+ sectors
• max 75 % in any one sector

Hybrid Strategies

Active Asset Allocator:

• Dynamic allocation across equity, debt, REITs, and Commodities
• max 25% unhedged derivatives

Hybrid Long Short:

• min 25% in equity + 25% in debt
• max 25%short allowed

SIFs VS Traditional Products- Where it Fit?

• Ideal for those seeking.
• Tax-efficient long-short strategies.
• Partial AIF benefits without a 1 CR Ticket size
• Greater Portfolio Diversification & control
• Not a replacement for PMS, as PMS allows higher concentration and tailored portfolios
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