Whalesbook
The framework for Specialised Investment Funds (SIFs) was introduced by the Securities and Exchange Board of India (SEBI) on April 1, 2025. Schemes began launching in late August, and currently, 19 distinct SIF strategies are being followed by 11 asset management companies (AMCs).
Inside SIF Strategies: Complexity and Execution
SIFs employ sophisticated strategies such as using derivatives, short selling, and flexible asset allocation across stocks, bonds, commodities, and real estate or infrastructure trusts. This flexibility aims to generate returns in various market conditions and protect capital during downturns. However, it adds significant complexity in execution. Fund managers must time trades precisely, manage leverage carefully, and control inherent risks. This makes SIFs more complex than standard equity or debt funds, and harder for investors to evaluate their performance.
Costs and Investor Fit: What to Watch
These advanced strategies, active management, and hedging often mean higher expense ratios compared to simpler mutual funds. Dharmendra Jain, co-founder of Ionic Wealth, said SIFs aim for capital preservation and outperforming the market, offering tax benefits similar to mutual funds. But Nitin Agrawal, CEO of Mutual Funds at InCred Money, noted that SIFs lack a long-term track record to prove they deliver better risk-adjusted returns than existing funds.
The Distributor Gap: A Hurdle for SIFs
A key concern is whether the distribution network is ready. Suranjana Borthakur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), pointed out a major hurdle: "With only about 3,000 certified distributors compared to 1.5 lakh registered mutual fund distributors, the certification gap is the industry’s most urgent challenge." Selling SIFs requires a deep understanding of each strategy's goals, liquidity, and client suitability, needing a more detailed approach than selling traditional mutual funds.
Who Should Invest in SIFs?
With a minimum investment of ₹10 lakh per PAN, SIFs are mainly for wealthy individuals, family offices (professional wealth managers for rich families), and experienced professionals. These investors typically have substantial wealth, a good understanding of financial markets, and a higher tolerance for risk. They seek more refined risk management than mutual funds offer, without the commitment required for managed investment accounts or other complex funds. Experts emphasize that SIFs are not suitable for first-time investors.