Specialised Investment Funds (SIFs) – Way To New Investment Opportunities

1 . THE EVOLVING INVESTMENT LANDSCAPE

India’s capital markets have long been characterized by a dichotomy in investor behaviour: retail investors gravitate towards mutual funds for their risk-diversified portfolios and ease of access, while High Net-Worth Individuals (HNIs) and institutional investors often prefer PMS for its personalized portfolio construction and active management. However, the absence of an intermediary vehicle that caters to investors seeking more flexibility than mutual funds, but without the significant capital commitment demanded by PMS, has left a regulatory void. This gap had led to the emergence of unregulated schemes that, while attractive to investors, carry substantial operational and financial risks due to their lack of oversight.

The introduction of Specialized Investment Funds (SIFs) under the SEBI (Mutual Funds) Regulations, 1996 vide circular dated 16^th December, 2024, directly addresses this regulatory vacuum. This initiative also reinforces the stability of the broader asset management ecosystem by channelling investor interest into a regulated space, thereby reducing systemic risk.

2. RATIONALE BEHIND THE INTRODUCTION OF SIFs

The decision to introduce SIFs is driven by several strategic considerations that reflect b