SIF Fee-Drag Calculator
A Specialised Investment Fund charges 2–2.25% TER plus a performance fee. See exactly how much of your corpus those fees consume — compared to a regular equity mutual fund — over your investment horizon.
Corpus (₹) over time — same gross return, different fee structures
Year-by-year comparison
| Year | MF corpus | SIF corpus | Fee drag (₹) | Drag (%) |
|---|---|---|---|---|
| 1 | ₹11,30,000 | ₹11,15,000 | ₹15,000 | 1.3% |
| 2 | ₹12,76,900 | ₹12,43,225 | ₹33,675 | 2.6% |
| 3 | ₹14,42,897 | ₹13,86,196 | ₹56,701 | 3.9% |
| 5 | ₹18,42,435 | ₹17,23,353 | ₹1,19,082 | 6.5% |
| 7 | ₹23,52,605 | ₹21,42,516 | ₹2,10,089 | 8.9% |
| 10 | ₹33,94,567 | ₹29,69,947 | ₹4,24,621 | 12.5% |
Assumes constant 14.0% gross return every year. Performance fee (0.400% p.a.) is modelled as a fixed annual charge — real SIFs use high-watermark accounting so the actual fee could be lower in down years.
What is a Specialised Investment Fund (SIF)?
A Specialised Investment Fund is a SEBI-regulated pooled investment vehicle introduced in 2024, sitting between a regular mutual fund and a PMS/AIF. SIFs can take long-short positions using derivatives — something regular MFs cannot do. The trade-off: much higher fees and a minimum investment of ₹10 lakh.
As of 2026, 11 AMCs have launched SIFs across 5 strategy types: Equity Long-Short, Equity Ex-Top 100 Long-Short, Hybrid Long-Short, Sector Rotation, and Active Asset Allocator strategies.
The fee structure: two layers of cost
Fixed TER (1.85–2.25% p.a.)
Charged daily on NAV, regardless of performance. Covers fund management, administration, and distribution. This alone is 2–4× the TER of a direct-plan active equity MF (typically 0.5–1.5%).
Performance fee (15–20% of excess returns)
Charged only when the fund earns above a hurdle rate (typically the benchmark index). Uses high-watermark accounting — no fee is charged to recover past losses. But in good years, it adds another 0.3–1% to your annual cost.
Why fees compound against you
The reason fee drag looks small annually but devastating over time is the same reason compounding works for returns: it works against you too. A 1.25% annual difference in net return seems minor, but over 15 years at 14% gross:
- MF at 13% net: ₹10L → ₹67.9L
- SIF at 11.75% net (2.25% TER, no perf fee): ₹10L → ₹57.0L
- Gap: ₹10.9L — more than the original investment.
Add a performance fee of 0.6% per year (on 3% alpha at 20% fee rate), and SIF net return falls to 11.15%: corpus → ₹52.9L. Gap widens to ₹15L.
When does a SIF make sense anyway?
Only if the long-short strategy consistently generates alpha that exceeds the fee drag. A SIF needs to beat the benchmark by at least 1.5–2.5% per year — every year — just to match a comparable mutual fund after fees. This is a high bar. Most active equity mutual funds in India fail to consistently beat the benchmark after costs. SIFs face the same fundamental challenge, with a higher cost base.
The case for a SIF rests on the long-short structure: the ability to profit from both rising and falling markets, and to reduce correlation with the Nifty. If you're a ₹1Cr+ HNI seeking a non-correlated sleeve in your portfolio and are comfortable with the fee structure, a SIF may be worth considering. For accumulation, a plain index fund or active MF is almost certainly cheaper and likely just as effective.
How this calculator models fees
This calculator uses a simplified annual compounding model:
- Both MF and SIF earn the same gross return (before fees) — you set this.
- MF net return = gross − MF TER.
- SIF net return = gross − SIF TER − performance fee (if enabled).
- Performance fee = fee rate × max(0, gross return − hurdle return).
- Corpora are compounded annually at the respective net rates.
Caveat: Real performance fees use high-watermark accounting — the fee only applies to gains above a prior all-time high NAV. In volatile markets with recovery years, the actual performance fee can be lower than the simplified model suggests. This calculator shows the maximum possible performance fee scenario for conservative planning.
Frequently asked questions
What is the TER of a Specialised Investment Fund (SIF) in India?
SEBI allows SIFs to charge a maximum TER of 2.25% per annum for equity-oriented strategies and 2.0% for hybrid strategies, as disclosed in the ISID (Information Sheet for Investment Decisions). This is significantly higher than a regular active equity mutual fund, which typically charges 0.5–1.5% TER. On a ₹50L investment over 10 years at 14% gross return, a 1.25% TER difference compresses your final corpus by approximately ₹11–13L.
How does a SIF performance fee work?
SEBI permits SIFs to charge a performance fee on returns above a pre-set hurdle rate, typically the benchmark index return. For example, if a SIF earns 16% gross and the hurdle is 12%, the performance fee is charged on the 4% excess: at a 20% fee rate, that's 0.8% of NAV per year — on top of the fixed TER. The performance fee uses high-watermark accounting, so a bad year followed by a recovery year can reduce the effective fee.
Is a SIF worth the extra fees if it generates alpha?
Only if the SIF generates consistent alpha that exceeds the fee drag. For a typical SIF at 2.1% TER + 0.4% performance fee, the total annual cost is around 2.5%. A comparable active equity MF might cost 1.0% TER. The SIF needs to earn at least 1.5% more per year — every year — just to match the MF after fees. If both earn the same 14% gross, the MF wins by ₹8–12L on a ₹50L investment over 10 years, purely due to fees.
What is the minimum investment for a SIF?
SEBI mandates a minimum of ₹10 lakh per investor for standard investors and ₹1 lakh for SEBI-accredited investors. Accredited investors are those who meet SEBI's income or net worth criteria (₹50L+ annual income or ₹7.5 Cr+ net worth). This makes SIFs inaccessible to most retail investors — they are designed for HNIs and UHNIs.
How is a SIF different from a PMS or AIF?
A SIF sits between a mutual fund and a PMS/AIF. Like a mutual fund, it's pooled and NAV-based. Unlike a mutual fund, it has a higher minimum investment (₹10L), a higher TER cap, and can charge performance fees. Compared to a PMS (minimum ₹50L) or AIF Category III (minimum ₹1 Cr), a SIF has a lower entry barrier but a similar fee structure. The key distinction from a PMS: SIF is pooled (all investors share one portfolio), while a PMS manages separate individual portfolios.
Do SIF fees have tax implications in India?
SIF fees reduce the NAV directly, so they reduce your taxable gains proportionally — you pay LTCG or STCG on a lower base. However, this is not a net benefit: the fee reduces your wealth by more than the tax saving. On a ₹10L gain, a 2.1% TER drag of ₹21,000 saves only ₹21,000 × 12.5% = ₹2,625 in LTCG tax. You're still net worse off by ₹18,375 per year. Fees only make sense when they fund genuine alpha generation.
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