The Securities and Exchange Board of India (SEBI) has launched a new investment category called the Specialized Investment Fund (SIF). It serves as a middle ground between mutual funds, which are generally lower risk, and Portfolio Management Services (PMS), which are tailored for ultra-high-net-worth individuals.
SIFs are considered more of a specialized investment product category than a traditional asset class due to their unique structure and investor requirements. Offering access to advanced and sophisticated investment strategies, SIFs require a ₹10 lakh minimum investment, making them accessible without the need for ultra-high-net-worth status.
SIFs offer flexibility, allowing open-ended, closed-ended, or interval-based structures to suit investor needs. They also use a transparent expense ratio system, starting at 2.25% for smaller funds and decreasing as fund size grows. Costs and fees for these funds are transparent and align with SEBI’s mutual fund regulations. Only mutual funds can launch SIFs, ensuring lower costs and better transparency compared to Portfolio Management Services (PMS). Shared expenses among investors in SIFs facilitate collective performance monitoring, ensuring transparency and accountability in fund management.
While SIFs rely on skilled fund managers and have a ₹10 lakh minimum investment, they provide advanced, transparent investment strategies for investors seeking higher returns. SEBI’s move aligns India with global standards and opens new avenues for wealth creation, bridging the gap between traditional funds and modern investment platforms.
