The Securities and Exchange Board of India (SEBI) has issued comprehensive new compliance reporting requirements for Specialised Investment Funds (SIFs), marking a significant step toward standardising disclosures and strengthening investor protection. The regulatory update addresses the unique position of SIFs, which bridge the gap between mutual funds and portfolio management services by offering more flexible investment strategies to retail investors.

Updated Regulatory Framework

Under the revised framework, asset management companies (AMCs) managing SIFs must adhere to all reporting obligations applicable to mutual funds under SEBI (Mutual Funds) Regulations, 1996, and the Mutual Fund Master Circular. This comprehensive approach ensures consistent regulatory oversight across different investment vehicle categories.

Key Reporting Changes

Compliance Test Report Enhancements

The Compliance Test Report (CTR) format has been significantly updated to include a dedicated section for SIFs. AMCs will now be required to report on multiple compliance areas:

Half-Yearly Trustee Report Requirements

Trustees managing SIFs will now submit enhanced Half-Yearly Trustee Reports (HYTR) that evaluate whether AMCs possess adequate expertise and systems to manage these specialised funds. The reports will confirm compliance across multiple operational areas:

• Minimum investment limits adherence
• Strategy characteristics alignment
• Fee structure compliance
• Investment restriction observance
• Product differentiation and branding requirements
• Risk management and investor protection obligations

Investment Landscape and Implications

SIFs provide retail investors access to sophisticated investment strategies including long-short equity, sector rotation, tactical asset allocation, and diversified portfolios. These funds offer exposure to various asset classes including equities, fixed income securities, REITs, InvITs, and derivatives, creating opportunities for more dynamic portfolio management.

Given the ₹10 lakh minimum investment requirement for SIFs, robust compliance and reporting mechanisms are essential for protecting investor interests. The enhanced reporting requirements ensure greater transparency in fund operations and risk management practices.

Implementation and Industry Impact

The new requirements are effective immediately and represent part of SEBI's broader initiative to bring uniformity and transparency to SIF reporting. This regulatory enhancement ensures investors have clearer understanding of fund operations, investment strategies, and associated risks, ultimately strengthening the overall investment ecosystem for specialised funds.

The Securities and Exchange Board of India (SEBI) has issued a comprehensive circular establishing detailed compliance reporting formats for Specialised Investment Funds (SIFs), marking a significant step in integrating these investment vehicles into the existing mutual fund regulatory framework. The new regulations come into force on January 8, 2026, and represent SEBI's commitment to creating a unified regulatory approach for sophisticated investment products.

Regulatory Integration Framework

The circular builds upon SEBI's February 2025 decision to introduce SIFs as a distinct category aimed at sophisticated investors seeking advanced investment strategies under the mutual fund structure. SEBI has clarified that all reporting requirements applicable to mutual funds under the SEBI (Mutual Funds) Regulations, 1996, the Master Circular for Mutual Funds, and other related guidelines will also apply to SIFs.

Rather than introducing standalone reporting mechanisms, the regulator has chosen to modify existing formats to incorporate SIF-specific disclosures, thereby ensuring uniformity and regulatory clarity across the investment management industry.

Enhanced Compliance Test Report Requirements

Under the revised framework, Asset Management Companies managing SIFs will be required to provide additional disclosures in the Compliance Test Report (CTR). SEBI has introduced a new Part IV in the CTR format that mandates comprehensive reporting across multiple compliance areas.

These enhanced disclosures will form part of the regular CTR submissions made by AMCs for mutual funds, ensuring consistent monitoring and oversight of SIF operations.

Strengthened Trustee Oversight

SEBI has also strengthened governance oversight by expanding the scope of the Half-Yearly Trustee Report (HYTR). A new Clause 72A has been added to the HYTR format, requiring trustees to specifically review and certify compliance related to SIFs.

Under the new requirements, trustees will now have to confirm several critical aspects of SIF management:

• AMC possesses necessary expertise for SIF management
• Adequate internal control systems are in place
• Robust risk management mechanisms are operational
• Compliance with disclosure requirements
• Proper product differentiation and branding practices
• Adherence to advertising guidelines
• Maintenance of investor protection standards

Implementation Timeline

The circular comes into force with immediate effect from January 8, 2026. This timeline provides Asset Management Companies and trustees sufficient time to adapt their existing compliance frameworks to accommodate the new SIF-specific requirements while maintaining continuity in their mutual fund operations.

The integration of SIFs into the existing mutual fund regulatory framework represents SEBI's strategic approach to expanding investment options for sophisticated investors while maintaining robust oversight and investor protection standards.