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The New Investment Horizon: Why Fund Managers Need SIF's Flexibility and Why Distributors Must Embrace It

Explore why SIF provides fund managers with crucial flexibility (hedging/derivatives) to generate returns in all market conditions and how MFDs should embrace this new, sophisticated investment product.

Mon Nov 24, 2025

The launch of the Specified Investment Fund (SIF) is more than just a new product; it's a structural necessity that expands the playing field for professional fund management and introduces a sophisticated investment horizon for clients. SIF provides fund managers with the essential flexibility previously denied by traditional mutual fund regulations, leading to a dynamic product that distributors must wholeheartedly embrace.


Why Fund Managers Need SIF

Traditional mutual funds operate under strict mandates that severely limit the tools a fund manager can use. SIF liberates the fund manager, allowing them to pursue higher risk-adjusted returns by effectively managing downside risk.

  • The Need for Liberty: Fund managers require a degree of flexibility that conventional mutual funds do not offer.
  • Derivatives and Hedging: SIF grants the fund manager the ability to deploy strategies, such as hedging positions using derivatives. This is crucial because mutual funds generally do not allow for holding hedge positions.
  • All-Weather Returns: This operational freedom allows the fund manager to deploy expertise to generate returns across all market conditions. Your fund manager is now empowered to work toward generating a return, whether the market is:
    • Rising (Bullish)
    • Falling (Bearish)
    • Sideways
In short, SIF provides fund managers with the strategic tools to return value even when personal trading expertise in derivatives is lacking among common investors. 


The New Investment Horizon for Clients

For the investor, SIF creates a different investment horizon, offering a sophisticated product that was previously out of reach.

  • Bridging the Gap: SIF addresses the massive investment gap between retail mutual funds (as low as ₹500 SIP) and high-ticket products like PMS (₹50 Lakh minimum) and AIF (₹1 Crore minimum). SIF is available at a more accessible minimum purchase size of ₹10 Lakh.
  • Transparency and Trust: The product structure is modelled after mutual funds, which are inherently transparent. Investors can track their daily NAVs and trust a product built on the backbone of the regulated mutual fund industry.
  • Long-Term Tax Advantage: When held for the long term, SIFs (being equally oriented) have taxation points that are not as aggressive as those for PMS, which further benefits the client.

Why Distributors Must Embrace SIF

The distributor community is the backbone of the success of any investment product in India. The Mutual Fund Distributor (MFD) is positioned to drive the next wave of growth with SIF.

  • Community Growth: Successful distributors who embrace SIF are not just growing their own business but are actively helping to build the community and promote the industry's collective growth.
  • Fulfilling Demand: There is significant, growing demand for SIFs, even from veteran investors, with inquiries from distributors whose clients have large AUMs. In fact, people aged 60 plus are also ready to become SIF distributors.
  • The Right Product: The distributor's job is to provide the right product to the client based on their appetite. SIF provides a necessary variety of products and funds to meet this need.
  • Shared Commitment: Distributors' readiness to clear the NISM Series XIII exam (the common derivative exam), a paper historically uncommon among MFDs, demonstrates a strong shared commitment to the SIF market.
The SIF product has great potential, and the combined effort of knowledgeable distributors and empowered fund managers is expected to make SIF as large and successful as the mutual fund industry itself.

Prof. Sheetal Kunder
SEBI® Research Analyst. Registration No. INH000013800 M.Com, M.Phil, B.Ed, PGDFM, Teaching Diploma (in Accounting & Finance) from Cambridge International Examination, UK. Various NISM Certification Holders. Ex-BSE Institute Faculty. 18 years of extensive experience in Accounting & Finance. Faculty Development Programs and Management Development Programs at the PAN India level to create awareness about the emerging trends in the Indian Capital Market and counsel hundreds of students in career choices in the finance area

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