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Frequently asked questions (FAQs) on SEBI's new Specialised Investment Funds (SIF) which sit in between Mutual Funds and PMS

Posted on 17 Dec 2024
Author: Sayan Sircar

Tags: FAQ ; News

3 mins read
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This article explains the basics of SEBI’s new Specialised Investment Funds which offer advanced strategies that mutual funds cannot and is suitable for investors below the PMS ₹50 lakhs threshold.

Frequently asked questions (FAQs) on SEBI's new Specialised Investment Funds (SIF) which sit in between Mutual Funds and PMS

📚 Topics covered:

What is a Specialized Investment Fund (SIF)?
What is the minimum investment required for SIFs?
What are the investment strategies available under SIFs?
Who can manage Specialized Investment Funds?
What is the capital gains tax on SIF?
Can SIFs invest in REITs and InvITs?
What is the process for launching SIF investment strategies?

On 17th December 2024, SEBI provided more information on the new investment product Specialized Investment Fund (SIF). Investors planning to invest in SIFs should wait until the actual products are launched. For now there are three good things about this product:

the ₹10 lakhs threshold which is lower than the ₹50 lakhs minimum for PMS
the taxation and the product structure is the same as mutual funds
the product gives exposure to strategies like long-short, inverse,

Our previous article covered this topic in detail: Understanding SEBI’s proposed New Asset Class funds: will India get Long-short Hedge funds and Inverse ETFs?

We will now cover a few FAQs based on the latest information from SEBI.

What is a Specialized Investment Fund (SIF)?

A Specialized Investment Fund (SIF) is a new asset class introduced by SEBI, positioned between portfolio management services (PMS) and mutual funds, accepting investments of ₹10 lakh or more and offering advanced investment strategies.

What is the minimum investment required for SIFs?

The minimum investment required for SIFs is ₹10 lakh, but this does not apply to accredited investors.

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What are the investment strategies available under SIFs?

SIFs can adopt open-ended, close-ended, or interval investment strategies, with subscription and redemption frequencies disclosed in the offer document. The same applies to mutual funds as well.

Who can manage Specialized Investment Funds?

Fund managers of SIFs must hold relevant certifications from the National Institute of Securities Markets (NISM) as mandated by SEBI.

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What is the capital gains tax on SIF?

Capital gains tax on SIF is the same as any equity mutual fund: LTCG is at 12.5% (more than a year) and STCG is 20% (less than a year).

Can SIFs invest in REITs and InvITs?

Yes, SIFs can invest in REITs and InvITs, but no single issuer can exceed 20% of their NAV across all strategies. The limit includes a 10% cap for mutual fund schemes.

What is the process for launching SIF investment strategies?

Launching SIF strategies follows the same procedure as mutual fund schemes, including clear disclosures on subscription, redemption frequencies, and compliance with mutual fund regulations on fees and expenses.

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