SEBI allowed this asset class last year. SIF is designed for those who can take high risks. It is quite different from the existing mutual fund schemes. Under the Specialized Investment Fund (SIF), investors get the opportunity to use advanced investment strategies.

SIF follows a different type of investment strategy and approach. Investors can get an estimated return of up to 25%, but this depends on market fluctuations. The minimum investment amount for SIF is Rs 10 lakh. In comparison, the minimum investment amount for many mutual fund schemes is Rs 100. Meanwhile, Portfolio Management Services require a minimum investment of Rs 50 lakh, and Alternative Investment Funds require at least Rs 1 crore.

What is a Specialized Investment Fund?

A Specialized Investment Fund (SIF) is an asset class that falls between mutual fund schemes and Portfolio Management Services (PMS). While you can start investing in mutual funds with just ₹100, PMS requires a minimum investment of ₹50 lakh.

With SIF, the minimum investment amount is ₹10 lakh. In comparison, Alternative Investment Funds (AIFs) require a minimum investment of ₹1 crore. SEBI, the stock market regulator, noticed that there was no investment option between PMS and mutual funds. Due to this gap, investors were forced to invest larger amounts, increasing the risk of financial loss.

Three Types of Funds in SIF

There are three types of funds offered under a Specialized Investment Fund:

  1. Short Fund – Up to 80% of your money is invested in equity, and up to 25% can be placed in short positions.
  2. Ex-Top 100 Long-Short Fund – 65% of your money is invested in companies outside the top 100, with the option to short up to 25%.
  3. Sector Rotation Long-Short Fund – At least 80% of your money is invested in four different sectors, with a short position option of up to 25%.

SIF vs Mutual Fund: Which One is Better for Middle-Class Investment Goals?

When it comes to investment options, Specialized Investment Funds (SIF) and Mutual Funds cater to different types of investors. While mutual funds are more accessible with a low entry barrier, SIF is designed for those who can invest larger amounts and take higher risks.

Key Differences Between SIF and Mutual Funds

Minimum Investment

  • Mutual Fund: Starts from ₹100
  • SIF: Requires at least ₹10 lakh

Risk & Return

  • Mutual Funds: Suitable for moderate to low-risk investors, offering stable returns
  • SIF: Uses advanced investment strategies, aiming for returns up to 25%, but with higher risk

Market Approach

  • Mutual Funds: Mostly follow a long-term, diversified investment approach
  • SIF: Allows short positions and sector-specific strategies for higher gains

Regulatory Framework

  • Mutual Funds: Regulated under SEBI’s mutual fund guidelines
  • SIF: Falls between mutual funds and Portfolio Management Services (PMS), offering more flexibility in investment strategies

Which One is Better for Middle-Class Investors?

For middle-class investors looking for stability and affordability, mutual funds remain the best choice due to their low entry cost and well-regulated structure. SIF, on the other hand, is better suited for high-net-worth individuals willing to take risks for potentially higher returns.