A: SIF is a SEBI-approved category of mutual fund designed for sophisticated investors. It is a new investment structure under the mutual fund license offering flexible, alternative investment strategies with a minimum ₹10 lakh investment with mutual fund-like benefits such as tax efficiency, transparency, and SIP/STP/SWP flexibility. It aims to bridge the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs).
AMC Guidelines For SIF
Question 1: Who can launch an SIF?
Only a SEBI-registered mutual fund can launch an SIF, and it must first obtain SEBI NOC. The AMC must meet either Route 1 or Route 2 eligibility conditions.
Route 1: Sound Track Record
An AMC qualifies if:
- It has been operating for at least 3 years, and • Has an average AUM of ₹10,000 crore or more in the immediate preceding 3 years, and • No regulatory action has been taken against it under SEBI Act Sections 11, 11B, or 24 in the past 3 years.
Route 2: Alternate Route
An AMC qualifies if it appoints:
- A CIO for SIF with at least 10 years of fund management experience and average AUM Managed of ₹5,000 crore or more, and • An additional Fund Manager with 3+ years of experience and ₹ managed average AUM of 500 crore or more , and • No regulatory action against sponsor/AMC in the past 3 years under SEBI Act
Question 2: What is the fund structure?
SIFs follow mutual fund structure and regulation: • Same trustee, AMC, custodian, RTA, and operations • No separate Chinese walls with MF division like PMS/AIF • Same SEBI-compliant governance and disclosures
Question 3: What types of investment strategies are allowed under SIF?
SIF allows investment strategies across three broad categories:
- Equity-Oriented Investment Strategies
- Debt-Oriented Investment Strategies
- Hybrid Investment Strategies Each category includes long-short strategies that may use equity, debt, and derivative instruments depending on the category’s mandate.
Question 4: What are the permitted Equity-Oriented strategies under SIF?
Strategy Name Key Features Equity Long-Short Fund Min. 80% in equity and equity-related instruments; max. 25% short exposure via unhedged derivative position in equity and equity related instruments Equity Ex-Top 100 Long Short Min. 65% in equity and equity-related instruments excluding top 100 stocks by market cap; max. 25% short exposure through unhedged derivative positions in equity and equity related instruments (non-large-cap stocks) Sector Rotation Long- Short Min. 80% in equity and equity related instruments in max 4 sectors; max. 25% sector-level short exposure via unhedged derivative position in equity and equity related instruments.
Short exposure shall apply at the sector level, covering all stocks within that sector held in the portfolio. If the fund is short a particular sector, then all stocks of that sector held in the portfolio, shall be held as short positions. A maximum of four sectors, inclusive of both long and short positions, will be permitted.
Question 5: What are the permitted Debt-Oriented strategies under SIF?
Strategy Name Key Features Debt Long-Short Fund Invests across durations in debt; allows limited unhedged short exposure via exchange traded debt derivative instruments.
Sectoral Debt Long Short Min. 2 sectors; max. 75% in one sector; max. 25% sector-level short exposure via exchange traded debt derivative instruments
Short exposure shall be across the sector, applicable for all the instruments of that particular sector held in the portfolio.
Eg. If the fund is short on Auto sector, then all debt instruments of auto sector held in the portfolio, shall be held as short positions.
Question 6: What are the permitted Hybrid strategies under SIF? How many strategies can an AMC launch under each category?
To avoid proliferation, an AMC can launch only one strategy per sub-category (e.g., one Equity Long-Short Fund, one Debt Long-Short Fund, etc.).
Question 7: Can leverage be used in SIFs? Use of leverage in investment strategies will not be allowed in SIF as total gross exposure of the portfolio cannot exceed 100% of the portfolio.
Question 8: How are derivatives used in SIFs? • Derivatives can be used for both hedging, rebalancing and directional purposes • Up to 25% AUM of short exposure can be used for naked (unhedged) derivative positions where in equity or debt instruments, as permissible in the investment strategy.
Question 9: How is derivative exposure calculated?
Exposure is calculated by: o Futures (Long & Short): Future price × Lot size × No of contracts o Options bought: Options premium paid × Lot size × No of contracts o Options sold: Market Price × Lot size × No of contracts
Question 10: Are offsetting positions allowed in derivatives?
Yes, but only on the same underlying security and having same expiry date. Specific offset rules apply for futures/options as per SEBI’s annexure. Strategy Name Key Features Active Asset Allocator Long Short Dynamic allocation across equity, debt, equity & debt derivatives, REITs, InVITs, and commodity derivatives; max. 25% unhedged short via derivative positions in equity & debt instruments Hybrid Long-Short Fund Min. 25% in equity and equity related instruments and 25% in debt; max. 25% unhedged short via derivative positions in equity & debt instruments
Question 11: Can SIFs invest overseas? Yes, SIFs can invest in international markets but constrained by MF-level overseas investment caps.
Question 12: How are SIF strategies benchmarked? Each SIF strategy shall follow a single-tier benchmark structure appropriate to its investment objective. The AMC shall appropriately select any of the broad market indices available, as a benchmark index depending on the investment objective and portfolio of the investment strategy. Optionally, a second-tier benchmark may be provided.
Question 13: What is the minimum subscription & redemption frequency in SIF?
Redemption and subscription frequency of the investment strategy will be mentioned in the offer document depending on the investment strategy. The subscription frequency and redemption frequency of an investment strategy may be distinct from each other (Eg: An investment strategy may permit daily subscriptions, while offering weekly redemptions)
Redemption frequencies: • Equity: Minimum redemption frequency - daily or any lesser redemption frequency as may be decided by the AMC • Debt: Minimum redemption frequency -once in a week or any lesser redemption frequency as may be decided by AMC • Hybrid: Minimum redemption frequency- two times in a week or any lesser redemption frequency as may be decided by AMC
AMCs may prescribe longer redemption intervals in line with the requirements of the investment strategy.
Question 14: Will SIFs follow an AIF-style drawdown model?
SIFs will follow an open-ended or closed ended or interval-based investment strategy; the drawdown model will not apply.
Question 15: Can SIF strategies be open-ended or close-ended?
Yes. SIF strategies may be launched as: • Open-ended • Close-ended • Interval strategies Investment strategies with subscription and/or redemption frequency other than daily shall be classified as ‘Interval investment strategies’ for the purpose of SIF.
The AMC decides the subscription and redemption frequency, which can vary (daily, weekly, etc.) depending on the strategy.
Question 16: Are interval and close-ended SIF strategies listed on stock exchanges?
Yes. Listing is mandatory for all close-ended and interval strategies.
Eligibility Criteria for SIF
Question 17: Who is eligible to invest in SIF?
Investors defined in the ISID of the strategy under “who can invest” section can invest in SIF, subject to meeting the minimum investment threshold of ₹10 lakhs per PAN across all SIF strategies and shall not include investments made by the investor in regular MF schemes of the same AMC.
Question 18: Are there any limitations on NRI participation in SIFs? The limitations, if any, for NRI participation are the same as application to Mutual Funds. There are restrictions for NRIs based in the USA and Canada; however, NRIs residing in the USA may be allowed to invest, subject to the submission of specific documents.
Question 19: Is there any exemption from the ₹10 lakh minimum investment requirement?
Yes. The ₹10 lakh minimum investment threshold does not apply to accredited investors.
Accredited investor” means any person who is granted a certificate of accreditation by an accreditation agency.
Eligibility Criteria for Accredited Investors 1.1. The following persons shall be eligible to be considered as Accredited Investors: (i)Individuals, HUFs, Family Trusts and Sole Proprietorships, which meet the criteria as under: a. Annual Income >= INR 2 Crore; OR b.Net Worth >= INR 7.5 Crore, out of which at least INR 3.75 Crore is in the form of financial assets: OR c. Annual Income >= INR 1 Crore+ Net Worth >= INR 5 Crore, out of which at least INR 2.5 Crore is in the form of financial assets.
(ii)Partnership Firms set up under the Indian Partnership Act, 1932 in which each partner independently meets the criteria for accreditation. (iii)Trusts (other than family trusts) with net worth greater than or equal to INR50 Crore. (iv)Body Corporates with net worth greater than or equal to INR 50 Crore.
Question 20: Can the ₹10 lakh threshold be fulfilled via SIPs or other systematic plans?
Yes. Systematic Investment Plan (SIP), Systematic Transfer Plan (STP), and Systematic Withdrawal Plan (SWP) are allowed under SIF, provided the aggregate investment across all strategies reaches/ maintained at ₹10 lakhs.
Question 21: What is the minimum amount to be maintained in SIF?
At all points in time, ₹10,00,000 minimums need to be maintained across all SIFs by an investor. Passive breaches, such as NAV declines, shall not be considered a violation of the Minimum Investment Threshold (MIT).
Question 22: What happens if my investment value falls below ₹10 lakhs?
- Active breach (due to partial redemption/ partial switch out): Investor's total investment value should not fall below the Minimum Investment Threshold due to redemption transactions initiated by the investor.
- Passive breach (due to marked to market): Passive breaches (occurrence of instances not arising out of omission and commission by AMC), such as those caused by a decline in Net Asset Value (NAV), shall not be treated as a violation of the Minimum Investment Threshold. However, if the total investment value falls below the threshold due to a passive breach, the investor shall only be permitted to redeem the entire remaining investment amount from SIF.
Scenario 1: If an investor has invested ₹10,00,000 and the market value declines to ₹8,00,000 due to market corrections, it will not be treated as a breach of the Minimum Investment Threshold (MIT)
Scenario 2: If an investor has invested ₹10,00,000 and the market value rises to ₹15,00,000, partial redemptions are allowed, provided the investor continues to maintain a minimum investment of ₹10,00,000.
Scenario 3: If an investor has invested ₹10,00,000 and the market value subsequently falls to ₹8,00,000 due to market corrections, partial redemptions will not be permitted. In such a case, the investor will be required to redeem the entire investment amount.
Note: Since the threshold tracking is at PAN level, 10 lakh limit for a minor folio will be tracked with guardian PAN.
Question 23:
Expenses and tax treatment
Will the expense ratio in SIFs be higher than MFs? The expense ratio limits in SIFs will be in line with MF regulations.
What is the taxation treatment of SIFs? Same as mutual funds: • No fund-level tax (Section 10(23D) applies) • Investor-level taxation based on category of the strategy being offered by the SIF • Taxation in SIFs is aligned with MF taxation. Equity strategies (>=65% allocation to equity) are subject to 12.5% long-term capital gains (LTCG) tax, while short-term gains (STCG) are taxed at 20%. Debt-oriented strategies are taxed as per the investor’s applicable slab rate. For hybrid strategies with less than 65% allocation to debt/equity and an investment horizon of over two years, the applicable LTCG tax is 12.5% while STCG will be taxed at individual slab rate
Will any other income receive from SIF be taxed? Income received from a SIF in the form of dividends will be taxable in the hands of the investor at their applicable income tax slab rate.
What will be the Taxation for NRIs in SIF?
Taxation for NRIs investing in SIFs will be the same as for resident investors, except that applicable TDS will be deducted at source.
What are the exit and entry loads? • Entry load: Not allowed • Exit load: Permissible, subject to scheme terms
Question 24: Transaction Processing & NAV
Applicability of features and plans
- Do SIFs offer SIP? The AMC may offer systematic investment options such as Systematic Investment Plan (‘SIP’), Systematic Withdrawal Plan (‘SWP’) and Systematic Transfer Plan (‘STP’) for investment strategies launched under the SIF, while ensuring compliance with the Minimum Investment Threshold of ₹10 lakh initial investment.
- Will SIF have both direct and regular plans? SIFs will offer both direct and regular plan options to investors. Also, SIFs may offer investors the choice between Growth and Dividend options.
Question 25: Do existing MF investors need a new folio for SIF?
Yes. As per SEBI, a separate folio must be created for SIF, even if the investor already holds an MF folio with the AMC.
Question 26: Can MF investor data be used for SIF folio creation?
Existing mutual fund schemes investment folio cannot be used for SIF investments and hence for SIF new folio can be created basis SIF investment application.
Question 27: Can KYC/AML/FATCA be shared between MF and SIF?
Yes. These details can be shared since they are PAN-based
Question 28: What is the frequency of NAV?
NAV will be published on daily basis (Business Days).
Question 29: What is the cut-off timing for receipt of SIF applications?
Purchase: In respect of valid applications received upto 3:00 p.m. and where the funds for the entire amount are available for utilization before the cut-off time i.e. 3:00 p.m. - the closing NAV of the day shall be applicable.
Redemption and Switch:
- Where the application is received up to 3:00 p.m. on a Business Day - Closing NAV of the day of receipt of application; and
- Where the application is received after 3:00 p.m. on a Business Day - Closing NAV of the next Business Day.
Note: In case of applications received on a Non-Business Day the closing NAV of the next Business Day shall be applicable.
Question 30: How will unit allotment be done if NAV is not published daily?
Transactions are processed only on next available NAV declaration day if the subscription or redemption request is received on a non-NAV day, in case there are no daily NAVs as per the investment strategy.
Switch Transactions
Question 31: Is switching allowed between MF and SIF? No, switching from MF investment to SIF scheme and vice versa is not allowed.
Switches: Valid applications for 'Switch-out' shall be treated as applications for Redemption and valid applications for 'Switch-in' shall be treated as applications for Purchase, and the provisions of the cut-off time and the Applicable NAV mentioned above as applicable to purchase and redemption shall be applied respectively to the 'Switch-in'and 'Switch-out' applications.
For Switch-ins of any amount: In case of switch from one Investment strategy to another Investment strategy received before cut-off i.e. upto 3:00 p.m. having business day for both the Investment strategies, closing NAV of the Business Day shall be applicable for switch-out Investment strategy and for Switch-in Investment strategy, the closing NAV of the Business Day shall be applicable, on which funds are available for utilization in the switch-in Investment strategy (allocation shall be in line with the redemption payout).
To clarify, for investments through systematic investment systematic investment and trigger routes such as Systematic Investment Plans (SIP), Systematic Transfer Plans (STP etc. the units will be allotted as per the closing NAV of the day on which the funds are available for utilization by the Target Investment strategy irrespective of the installment date of the SIP, STP or record date of IDCW etc.
DEMAT Mode
Question 32: Can SIF transactions be allowed through DEMAT mode? Will units of SIF strategies be listed? Yes. Further, as per para 8 of the SEBI circular dated February 27th, 2025, it is mandatory to list units of closed ended and interval investment strategies on recognized stock exchanges. Furthermore, for the sake of definition, all investment strategies with subscription and / or redemption frequency other than daily shall be classified as ‘interval investment strategies’.
Question 33: Is a demat account necessary to invest in SIFs?
Not mandatory, however SIFs (especially debt and hybrid) will be listed on exchanges and investors wanting to transact through exchange will need to opt for units in demat mode.
To provide an exit option for the redeeming investors, the units of all close ended and interval investment strategies of SIF shall be mandatorily listed on recognized stock exchange(s). Investment strategies with subscription and/or redemption frequency other than daily shall be classified as ‘Interval investment strategies’ for the purpose of SIF.
Question 34: Can broking platforms sell SIFs? Yes, broking platforms sell SIFs provided the platform has ARN and required NISM XIII certification. Accreditation & Compliance
Question 35: What is the exemption given to Accredited Investors?
The threshold limit for initial investment of INR 10 lakhs or maintenance of INR 10 lakhs AUM across all strategies offered by a given SIF is exempted for PANs belonging to Accredited investors.
Question 36: What happens if an Accredited Investor's certification expires and AUM across all strategies is less than 10 lakhs?
- If the investors request for a partial redemption, then it will not be allowed as investors must opt for full redemption only.
- All inflows will continue (additional purchase, switch-in, STP-in etc)
- All partial redemptions will be rejected (partial redemption, partial switch out and STP outs)
Question 37: How will RTA verify or validate the Accreditation status?
RTA will verify the status with help of CVL and NDML services.
NISM XIII Certification and distribution of SIF
Question 38: Is NISM XIII certification mandatory for distributors selling SIF?
Yes, as per Para 10 of SEBI circular dated February 27th, 2025, any entity engaged in sale and/or distribution of MF products shall also be eligible to offer products under the SIF subject to such entity having passed NISM Series XIII: Common Derivatives Examination. This implies that any ARN or EUIN holder attached to the ARN must be NISM Series VA certified and NISM Series XIII certified to engage in sale and / or distribution of SIF.
Question 39: How will RTA validate ARN or EUIN holder is NISM Series XIII certified and its validity?
The AMFI unit of CAMS provides Agent Master to respective RTAs through CDMS feeds indicating NISM Series XIII certification details at ARN and EUIN level. Process Controls & Threshold Monitoring
Question 40: What is the minimum AUM threshold defined for SIF and how it will be handled by RTA?
- Following is the minimum amount or AUM criteria as prescribed by SEBI circular dated February 27th, 2025: -
- The minimum amount to be invested for the creation of a folio during NFO or afterwards is INR 10 lakhs or more.
- Further at any given point in time, the AUM per PAN should be maintained at INR 10 lakhs or more
- The above two limits are per PAN across strategies launched under SIF by the AMC
- Further the limit is application only to investors who are not accredited
- In case of an Active Breach (investor-triggered) and / or Passive Breach (market-driven), the following are the controls applicable: -
- All partial withdrawals or partial switches to be disallowed and this also includes systemic withdrawals or switch-outs • Inflow continues to remain as-is and this includes running SIPs too • If the investor opts to redeem the amount, it must be allowed only for full unit redemption • In case of Active breach, RTA will trigger communication to investors informing about active breach and the re-balancing period of 30 days.
Question 41: What are the various sources of inflow in SIF
All the usual modes of transaction acceptance for instance, Physical/Digital through website of AMC/Kfin/Exchange- Non Demat /Exchange -Demat/ Channel partner/MFU/MF Central will continue for accepting applications under SIF.
Question 42: Can investors invest using existing Mutual Fund One Time Mandate (OTM)?
Yes.
Distributor Services
Question 43: Are existing distributor reports available for SIF?
Yes. All MF reports can be extended to SIF as well.
Question 44: Any new agreement is required for existing Channel Partners?
Channel Partners need to sign an addendum to the existing Channel Partners Agreement.
Investor Services & Statements
Question 45: Will SoA be issued to SIF investors?
Yes.
Question 46: What communications will investors receive?
All existing MF transaction communications will apply to SIF.
AMC Brand Requirements
Does SIF need separate branding from MF?
Yes, SEBI mandates a separate logo, brand name, and website. MF branding may only be used with phrases like 'brought to you by' for a period of 5 years from the date of SEBI’s NOC for the launch of SIF.
Subscription & Redemption Rules
Question 48: What redemption rules apply to SIF strategies?
Redemption and subscription frequency must be declared in the offer document and can vary by strategy (daily, weekly, etc.).
Question 49: Are all SIF strategies listed on exchanges?
Not necessarily, however all close-ended and interval SIF strategies must be listed on recognized stock exchanges to provide investors with an exit option
Question 50: Can the subscription and redemption frequencies be different?
Yes. SIF schemes may have distinct subscription and redemption frequencies. Example: An investment strategy can allow daily subscriptions but only weekly redemptions.
Question 51: Can AMCs implement appropriate notice periods for redemptions?
Yes. AMCs may implement appropriate notice periods up to 15 working days for redemptions, depending on the liquidity profile of the strategy. Key Points: • NAV applicable will be based on the end of the notice period. • The notice period must be disclosed in the offer document.
Question 52: What happens if my SIF investment falls below ₹10 lakh due to redemption?
Redemptions causing the investment to fall below ₹10 lakh are not permitted. Exceptions: • If the shortfall is due to market movements (passive breach), where the partial redemptions are not allowed. • In such cases, only full redemption of the remaining investment is permitted.
Question 53: Where can I find redemption-related details for a specific SIF strategy?
All redemption terms, including frequency, notice periods, and procedures, will be disclosed in the: • Investment Strategy Information Document (ISID) • Key Information Memorandum (KIM) These documents are available on: • The AMC’s dedicated SIF webpage • The AMFI website
Disclosure Requirements & Risk Bands
Question 54: What must be disclosed in offer documents?
Offer documents must include: o Redemption/subscription frequency o Notice period o Portfolio disclosure schedule o Investment objective o Derivative strategy limits o Scenario analysis o Liquidity risk tools
Question 55: What is a Risk Band in SIF?
It’s a pictorial risk meter with levels 1 to 5 (Lowest to Highest). AMCs must update it monthly and disclose changes annually on websites.
Question 56: How frequently is the SIF portfolio disclosed?
Every alternate month (May, July, Sept, etc.) with ISINs and derivatives included, published on AMC and AMFI sites within 10 days.