New Delhi, May 20 -- Specialized investment funds (SIFs), positioned between mutual funds (for retail investors) and portfolio management services (PMS) or alternative investment funds (AIFs) for high net-worth individuals, offer multiple advantages.

Being within the mutual fund fold, SIFs enjoy MF-style taxation. Mutual funds are tax-free trusts; profits accrue within the fund. PMS and AIF categories I and II are pass-through for tax purposes.

Sebi permits short positions in SIFs up to 25% of the portfolio. Unlike long-only MFs, SIF managers can benefit from falling stock prices. Like MFs, SIFs can also use derivatives for hedging, reducing volatility during market swings.

The first SIF was launched in October 2025. As per AMFI data, ...