Specialised Investment Funds vs PMS: Can You Access Sophisticated Investment Strategies With Just ₹10 Lakh?
Portfolio Management Services (PMS) have traditionally catered to investors with larger portfolios, offering access to specialised investment strategies and customised portfolio management. However, with a minimum investment requirement of ₹50 lakh, they remain out of reach for many investors.
Specialised Investment Funds (SIFs) are now creating another route to such strategies. With a minimum investment threshold of ₹10 lakh, they allow eligible investors to access approaches such as long-short equity through a mutual fund structure.
With fund houses such as Edelweiss and HDFC entering this space, an important question emerges: can SIFs make sophisticated investment strategies more accessible, and how do they compare with PMS in terms of costs, flexibility, risks and investor protection?
What Are Specialised Investment Funds (SIFs)?
Introduced by SEBI in February 2025, Specialised Investment Funds (SIFs) aim to bridge the gap between conventional mutual funds and Portfolio Management Services (PMS).
Unlike traditional mutual funds, SIFs allow fund managers greater flexibility to use sophisticated strategies such as long-short equity and derivatives-based investing.
With a minimum investment requirement of ₹10 lakh across an AMC's SIF strategies, they offer eligible investors access to these strategies at a lower entry threshold than PMS, which requires ₹50 lakh.
However, the lower investment requirement is only one part of the comparison. Their costs, investment flexibility and liquidity conditions also need to be examined.
SIF vs PMS: What Are the Key Differences?
While both Specialised Investment Funds (SIFs) and Portfolio Management Services (PMS) offer access to specialised investment strategies, they differ in their investment structure, minimum investment requirements and portfolio flexibility.
Parameter
SIF
PMS
Minimum investment
₹10 lakh across an AMC's SIF strategies
₹50 lakh
Investment structure
Pooled investment through a fund
Individual client portfolio
Short-selling exposure
Permitted through equity derivatives, subject to regulatory limits
Depends on the strategy and applicable regulations
Portfolio management
Investors hold units in a common scheme
Portfolio managed separately for each client
Customisation
Limited to the scheme's investment strategy
Greater scope for individual portfolio customisation
Regulatory framework
SEBI Mutual Fund Regulations
SEBI PMS Regulations
The key difference lies in how investments are managed. SIFs pool money from multiple investors into a common portfolio, with investors holding units in the scheme. PMS, on the other hand, manages each client's portfolio separately, allowing greater flexibility in individual investment decisions.
SIFs also permit unhedged short exposure through equity derivatives within prescribed regulatory limits. PMS strategies operate under a separate regulatory framework, with investment flexibility depending on the applicable rules and client mandate.
While SIFs offer a lower entry threshold, PMS provides greater scope for portfolio-level customisation. The differences become even more relevant when comparing their fees, liquidity and investment strategies.
What Investment Strategies Do SIFs Offer?
One of the biggest attractions of SIFs is the flexibility to use investment strategies that go beyond conventional long-only investing. These include equity long-short, sector rotation and hybrid long-short strategies, which can use derivatives to manage exposure and seek additional returns.
For example, Edelweiss Mutual Fund's Altiva SIF offers an Equity Long-Short Fund that primarily invests in listed equities while allowing limited unhedged short exposure through equity derivatives, subject to a 25% regulatory limit. Its other offerings include an Equity Ex-Top 100 Long-Short Fund and a Hybrid Long-Short Fund.
HDFC Mutual Fund has also entered the segment with its H-SIF Hybrid Long-Short Fund, which combines equity and debt investments with limited short exposure through derivatives.
How Do SIFs and PMS Compare on Fees and Liquidity?
Costs and liquidity are two important factors investors should consider before choosing between SIFs and PMS.
SIFs charge investors through an expense ratio, which covers fund management and other operating expenses and is deducted from the scheme's assets. PMS, on the other hand, can charge a fixed management fee, a performance-linked fee or a combination of both, depending on the agreement with the investor.
Liquidity also differs. SIF redemption conditions depend on the individual scheme, including its exit load and redemption frequency. PMS withdrawals are governed by the agreement between the investor and portfolio manager, and partial withdrawals may be subject to conditions.
Therefore, SIFs do not automatically offer lower costs or easier withdrawals than PMS. Investors need to examine the expense ratio, additional charges, exit loads and withdrawal conditions of each product before making a decision.
Also read: BOB Lakhpati vs SBI Har Ghar Lakhpati: Which RD Scheme Can Help You Save ₹1 Lakh Faster?
Who Should Consider SIFs and Who Should Consider PMS?
SIFs may appeal to investors who want exposure to specialised investment strategies but prefer investing through a pooled mutual fund structure. Their ₹10 lakh minimum investment also makes them accessible at a lower entry threshold than PMS.
PMS may be more suitable for investors with larger portfolios who value individual portfolio management and greater customisation. However, this flexibility comes with a higher minimum investment and fees that can vary across portfolio managers.
Both products involve market risks, and strategies involving derivatives or short positions can carry additional risks. Investors should therefore consider their risk appetite, investment horizon, liquidity needs and ability to understand these strategies before choosing between them.
SIFs vs PMS: Which Makes More Sense for Investors?
SIFs offer an additional route for investors seeking specialised investment strategies without meeting the higher entry requirement of PMS. Their pooled structure and ₹10 lakh minimum investment make them an interesting option for investors who want to explore strategies such as long-short equity.
PMS, however, continues to offer an advantage in terms of individual portfolio management and customisation, which may appeal to investors with larger portfolios.
Neither product is automatically better. The choice depends on the investor's capital, risk appetite, preference for portfolio customisation and understanding of the strategies involved. SIFs may make sophisticated investing more accessible, but investors should look beyond the lower entry threshold and evaluate the costs, risks and liquidity conditions before investing.