SEBI Introduces Specialized Investment Funds as a New Asset Class
The Securities and Exchange Board of India (Sebi) has a new asset class, which is the Specialised Investment Fund (SIF), that will allow mutual funds (MFs) to offer significant investment strategies to investors with higher risk preferences.
The new asset class, which sits between mutual funds (MFs) and portfolio management services (PMSes), will introduce a variety of investment products, methods, and strategies. The SIF asset accepts investments of around Rs. 10 lakh or more around all investment strategies.
This SIF asset class focuses on filling the gap between PMS and mutual funds and provides a variety and selective choices for investors who are ready to take risks and looking for higher returns.
For most ambitious investors, mutual funds and PMS have long been the top investment choices. The investment in SIF can be an open-ended investment strategy, a close-ended investment strategy, or an interval investment strategy, with the subscription and redemption frequency appropriately disclosed in the document.
The fees and expenses for the investment strategies launched under the SIF will follow the rules set in Regulation 52 of the mutual fund rules.
The new SIF rules also have restrictions on investments, like an investment strategy cannot invest more than 20% of its NAV (net asset value) in debt instruments, including money market instruments and non-money market instruments, which are issued by a single issuer and are not investment grade. The investment limit may be continued to 25% of the NAV of the investment strategy with the approval of the Board of Directors and Board of Trustees of the asset management company.
Government securities, Treasury bills, and triparty repo on government securities or Treasury bills are not affected by these restrictions.
SIFs are not allowed to invest more than 15% of the company’s paid-up capital with the voting right.
