SIF Strategies Explained: All 7 SEBI Long-Short Types

SIF strategies are the seven investment strategy types that SEBI permits a Specialised Investment Fund (SIF) to launch under its circular of 27 February 2025: three equity, two debt and two hybrid, each allowed up to 25% of net assets in unhedged short positions through exchange-traded derivatives. This guide sets out each strategy's allocation rules, purpose, horizon, risk and the mutual fund category it most resembles.

The seven SIF strategies at a glance

The framework was introduced under the SEBI (Mutual Funds) Regulations, 1996 and now sits inside the SEBI (Mutual Funds) Regulations, 2026 (in force 1 April 2026); a fund house may launch only one strategy under each type. The figures are regulatory floors and caps, not live holdings.

An AMC may set a less frequent redemption window than the reference, so read the strategy's Investment Strategy Information Document (ISID).

Equity long-short fund: the diversified core

An equity long-short fund keeps at least 80% of net assets in equity and equity-related instruments, with no market cap or sector restriction. The manager can short stocks or indices through derivatives, up to 25% of net assets unhedged, while gross exposure (long plus short) stays within 100%. A short position gains if the shorted stock falls and loses if it rises, so the short book adds risk as well as a cushion.

• Structure: open-ended or interval; horizon five years or more
• Risk: high; ten of the 12 live strategies in October 2026 carried SEBI risk band 5
• Closest mutual fund categories: large cap and aggressive hybrid funds

Equity ex-top 100 long-short fund: mid and small cap focus

The ex-top 100 long-short strategy invests at least 65% of net assets in companies ranked 101st and below by market capitalisation, that is, mid and small caps under SEBI's definitions. The short book, capped at 25% unhedged, is also directed outside the top 100. These stocks generally carry higher volatility and liquidity risk than large caps.

• Structure: open-ended or interval; horizon five years or more
• Risk: very high; six of the seven live strategies in October 2026 sat in risk band 5
• Closest mutual fund categories: mid cap, small cap, flexi cap or multi cap funds

Sector rotation long-short fund: concentrated sector calls

A sector rotation long-short fund holds at least 80% of net assets in equity across a maximum of four sectors, rotating between them as the manager's outlook changes. The 25% unhedged short cap applies at sector level: a shorted sector covers every stock of that sector held in the portfolio. If the chosen sectors lag, the strategy can trail a diversified equity fund.

• Structure: open-ended or interval; horizon five years or more
• Risk: very high
• Closest mutual fund categories: thematic and business cycle funds

Hybrid long-short SIF: balanced with a short book

The hybrid long-short SIF must hold a minimum of 25% of net assets in equity and a minimum of 25% in debt throughout. The rest can move between equity, debt, REITs, InvITs and commodity derivatives as its ISID permits; shorts through equity and debt derivatives are capped at 25% unhedged, combined.

• Structure: interval under SEBI's framework (redemption up to twice a week, or less often if the fund house sets it); horizon three years or more
• Risk: strategy-dependent; in October 2026 live strategies ranged from risk band 1 to band 5, so check the specific strategy's band
• Closest mutual fund categories: balanced advantage, equity savings and income plus arbitrage funds

Active asset allocator SIF: no fixed floors

The active asset allocator SIF is the most flexible of the seven. It has no minimum allocation to any asset class and can shift across equity, debt, derivatives, REITs, InvITs, foreign securities and commodity derivatives within its ISID. Combined unhedged shorts are capped at 25% of net assets. It is an interval strategy, and its risk profile can look very different from one month to the next.

• Structure: interval; horizon three years or more
• Risk: strategy-dependent; the three live strategies in October 2026 all sat in risk band 2
• Closest mutual fund category: multi asset allocation funds

Debt long-short SIF and sectoral debt long-short fund

The debt long-short SIF invests in debt instruments across duration and may take unhedged short exposure through exchange-traded debt derivatives, capped at 25% of net assets. The sectoral debt long-short fund holds debt of at least two sectors with no more than 75% in any one, and a short applies across a whole sector: being short on one sector means all of that sector's debt instruments in the portfolio are held as short positions.

Both are interval strategies with a reference redemption frequency of once a week. As of October 2026 no debt SIF had been launched; the risks to understand are interest rate, credit and reinvestment risk. Closest mutual fund categories: short term, corporate bond and dynamic bond funds; the sectoral version sits closer to performing credit or direct debt offerings.

Rules that apply to every SIF strategy

• Minimum investment: ₹10 lakh in aggregate across all SIF strategies of one fund house at PAN level, effective 1 April 2025. Regular mutual fund holdings do not count and SEBI-accredited investors are exempt. This places SIF between mutual funds, PMS at ₹50 lakh and AIF at ₹1 crore; GIFT City funds are a separate offshore structure under IFSCA rules.
• Exposure: unhedged shorts up to 25% of net assets and gross exposure within 100%; a SIF is not leveraged the way a Category III AIF can be.
• Risk band: a five-level SEBI risk band, evaluated monthly and published within ten days of month end.
• Tax: SIF units follow mutual fund taxation: no tax at fund level (the Section 10(23D) exemption of the Income-tax Act, 1961, replaced by the Income-tax Act, 2025 from 1 April 2026) and capital gains tax on redemption. At the Finance (No. 2) Act, 2024 rates, still in force for FY 2026-27, equity-oriented strategies (at least 65% equity) pay 20% short-term and 12.5% long-term capital gains tax; debt-oriented strategies are taxed at your slab rate; hybrid strategies depend on equity share and holding period. Confirm your position with a chartered accountant.

How Sanriya helps

Sanriya Finvest Pvt. Ltd., Pune, is an AMFI-registered mutual fund distributor (ARN-193359) and an APMI-registered PMS distributor (APRN01056). As a distributor, we help you compare each SIF strategy's SEBI parameters, read the ISID and risk band, plan the ₹10 lakh aggregate and complete the paperwork. Contact us to talk through the seven SIF categories.

Frequently asked questions

What are the seven SIF strategies permitted by SEBI? Three equity strategies (equity long-short, equity ex-top 100 long-short, sector rotation long-short), two debt strategies (debt long-short, sectoral debt long-short) and two hybrid strategies (hybrid long-short, active asset allocator long-short), under SEBI's circular of 27 February 2025.

What is the difference between an equity long-short fund and an ex-top 100 long-short fund? An equity long-short fund holds at least 80% in equity with no market cap restriction. An ex-top 100 long-short fund holds at least 65% in companies ranked 101st and below by market capitalisation, with its short book also outside the top 100. Both cap unhedged shorts at 25%.

Can I split the ₹10 lakh minimum across more than one SIF strategy? Yes. The ₹10 lakh minimum is an aggregate across all SIF strategies of one fund house at PAN level, effective 1 April 2025, so ₹4 lakh in one strategy and ₹6 lakh in another meets the rule. SEBI-accredited investors are exempt.

Are debt long-short SIFs available in India yet? No. As of October 2026 all 34 live SIF strategies were equity or hybrid. SEBI's framework defines both debt strategies as interval strategies with a reference redemption frequency of once a week.