A Specialised (SIF) has a minimum investment requirement of ₹10 lakh, but this does not mean an investor has to put ₹10 lakh in a single SIF strategy.
Here’s what investors need to know about the ₹10 lakh SIF requirement.
What are the different SIF strategies?
SIF strategies are broadly divided into equity-oriented, debt-oriented, and hybrid , depending on the type of assets they invest in and the approach they follow.
- Equity-oriented: Equity Long-Short Fund, Equity Ex-Top 100 Long-Short Fund, and Sector Rotation Long-Short Fund
- Debt-oriented: Debt Long-Short Fund and Sectoral Debt Long-Short Fund
- Hybrid: Active Asset Allocator Long-Short Fund and Hybrid Long-Short Fund
What does the ₹10 lakh minimum investment in SIFs mean?
Nitin Agrawal, CEO, Mutual Funds by InCred Money, explained that the ₹10 lakh threshold is not a per-strategy requirement but an AMC-level aggregate.
“An investor can split their investment across multiple SIF strategies offered by the same AMC, and the combined value counts toward meeting the threshold,” he added.
What do the PAN-level thresholds in SIF mean?
Agrawal explained that Sebi tracks eligibility at the individual investor level (PAN) for each AMC separately. The ₹10 lakh check applies across all SIF strategies of a given AMC, not to each strategy separately.
Sougata Basu, Founder, CashRich, explained that the PAN level means every folio and holding mode tagged to one PAN gets added up across the investment strategies offered under that SIF.
Basu clarified that Sebi frames the rule around “investment strategies” under an SIF rather than “schemes”. Each strategy has its own NAV and works much like a scheme, but with wider tools (short positions, derivatives).
How does the ₹10 lakh threshold work in an SIF?
Basu explained this with an example. If an AMC offers a Hybrid Long-Short and an Equity Long-Short strategy, an investor can invest ₹6 lakh in one and ₹4 lakh in the other. Since the combined investment is ₹10 lakh under the same PAN and AMC, the investor meets the threshold.
“However, ₹5 lakh invested in an SIF of AMC A and ₹5 lakh in an SIF of AMC B would not qualify. The ₹10 lakh threshold is calculated separately for each AMC,” he added.
Do regular mutual fund investments count towards the ₹10 lakh SIF threshold?
No.
“Only SIF investments count. Regular mutual fund holdings with the same AMC are excluded, even if the investor holds crores there. Someone with ₹50 lakh in regular schemes and ₹8 lakh in SIF strategies does not meet the threshold,” Basu explained.
Who is exempt from the ₹10 lakh SIF investment requirement?
According to Agrawal, Sebi-accredited investors are exempt from the ₹10 lakh minimum investment requirement.
Basu added that mandatory investments made by an AMC on behalf of its designated employees under the “skin-in-the-game” requirement are also exempt.
How do SIP, SWP, and STP work in SIFs?
All three are permitted, subject to one binding condition. The aggregate SIF investment at the PAN level must stay at or above ₹10 lakh through these transactions, Basu noted.
Once the ₹10 lakh threshold is met, SIP, SWP and STP facilities work broadly similarly to regular mutual funds, Agrawal added.
What happens if the investor’s SIF holdings fall below ₹10 lakh?
Agrawal said if the fall below ₹10 lakh is due to market movements, the investor does not need to top up the investment and can continue holding.
Basu said a passive breach happens when the fall is purely market movement or NAV decline. “However, after a passive breach, partial redemption is not allowed. The investor must redeem the entire remaining investment,” he added.
Basu explained that an active breach occurs when the fall is due to the investor’s own action, such as redemption, transfer, sale, stock exchange transaction, or off-market transfer. In such cases, all units across the SIF’s investment strategies are frozen for debit.
“The investor gets 30 calendar days to restore ₹10 lakh. If the amount is restored, the units are unfrozen without penalty. If not, the frozen units are automatically redeemed at the applicable NAV of the next business day after the 30th day,” he added.