New Delhi: Markets regulator Sebi on Thursday came out with a compliance reporting format to bring uniformity in the way Specialized Investment Funds (SIFs) are reported by mutual funds and asset management companies (AMCs). The Compliance Test Report (CTR) format has been modified to include a new part specifically for SIFs, Sebi said in its circular.
Under the new format, AMCs managing SIFs will now have to report additional compliance details such as adherence to minimum investment thresholds, certification requirements for SIF fund managers (when notified), compliance of investment strategies with regulatory characteristics, limits on fees and expenses, and investment restrictions, including single-issuer limits for debt and equity.
This format also includes reporting restrictions on derivatives, REITs/INVITs, ownership of paid-up capital, product differentiation, branding and advertising norms, disclosures in offer documents, portfolio disclosures, rules for subscription and redemption, including notice period, listing of units, benchmarking, risk band, and scenario analysis.
Further, the Half-Yearly Trustee Report (HYTR) format has also been amended to add a new clause. Sebi said that Trustees will have to confirm whether the AMC has adequate expertise and systems to manage SIFs, compliance with minimum investment limits, fee and expense norms, strategy characteristics, investment restrictions, product differentiation, disclosure and branding requirements, and whether all other risk management, investor protection, disclosure, and reporting obligations have been followed.
These changes, which come into effect immediately, have been issued to safeguard investor interests and ensure consistent regulatory reporting for SIFs. Also, the regulator clarified that all existing reporting requirements applicable to mutual fund regulations, the Mutual Fund Master Circular, and other related guidelines will also apply to SIFs. In April, the Securities and Exchange Board of India (Sebi) introduced SIF to bridge a structural gap between mutual funds and PMS (portfolio management services) in terms of portfolio flexibility.
Through SIFs, retail investors will have access to active and dynamic management strategies such as long-short equity, sector rotation, tactical asset allocation, and diversified strategies with exposure to equities, fixed income, REITs (real estate investment trusts), InvITs (infrastructure investment trusts), and derivatives, with a minimum investment of Rs 10 lakh.
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