Specialized Investment Fund: What is it and who can invest in it? All you need to know

Specialized Investment Fund: The Securities and Exchange Board of India (SEBI) recently introduced a standard format for mutual funds aiming to establish Specialized Investment Funds (SIF). The SIF is particularly designed for those investors who have a good understanding of the market and have a risk appetite. Here's all you need to know about SIFs.

Updated May 2, 2025 22:20 IST

Specialized Investment Fund (iStock)

Specialized Investment Fund : The Securities and Exchange Board of India (SEBI) has recently introduced a standard format for mutual funds aiming to establish Specialized Investment Funds ( SIF ). With this move, SEBI aims to streamline the processing of such applications. So, what is SIF? Who can invest in SIFs? Let’s understand here.

What is SIF?

SIF/ Specialized Investment Fund is an investment fund where multiple individuals or institutions pool their money for a long-term investment. For example, if 100 people deposit Rs 1,000 each month, a total of Rs 1,00,000 would be collected.

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This money will be then invested by an expert fund manager in suitable investment options to generate profits for all. Moreover, SIFs require investment of Rs 10 lakh or over.

Who can invest in SIF?

The SIF is particularly designed for those investors who have a good understanding of the market and have a risk appetite. Also, SIFs are not for retail investors, as they involve complex strategies and high risk.

SIF features

The objective of SIF is to invest in a specific sector, such as the stock market, bonds, real estate, or a particular project. SIFs have been introduced to remove the gap between mutual funds and Portfolio Management Services (PMS) in terms of portfolio flexibility.

Here are certain features of SIFs

Flexible Investment Options: SIFs are not limited to shares or bonds. They can also invest in private equity, real estate, international markets and unlisted companies.

Portfolio diversification: Fund managers can invest in different sectors, that can reduce risk.

Investment rules for SIF

The market regulator SEBI has issued some clear guidelines for SIF investment. These are given below -

Debt Investment: For debt investment, one can invest up to 20% (with the approval of 25% trustee) in the bond of the same company. Meanwhile, there is no limit on government bonds.

Equity Investment: For equity investment, there’s is limit of up to 15% of voting shares and up to 10% NAV investment.

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REITs and InvITS: Up to 20% of total NAV can be invested in these trusts, but not more than 10% in any one trust.

Derivatives: Up to 100% of total net assets can be invested in derivatives, subject to strict risk management rules.

Necessary precautions for investors

Here are the crucial factors that investors must consider -

Risk: Although SIFs have potential to offer higher returns, they also come with higher risks.
Liquidity: It may be challenging for investors to withdraw money quickly.
Fee structure: SIF charges may be higher as compared to traditional mutual funds.

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Specialized Investment Fund: What is it and who can invest in it? All you need to know

What is SIF?

Who can invest in SIF?

SIF features

Here are certain features of SIFs

Investment rules for SIF

Necessary precautions for investors

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