Have you been a mutual fund (MF) investor who is looking at bigger opportunities but finds the minimum investment needed in portfolio management services (PMS) too high? Soon, you would be able to invest in Specialised Investment Funds.
“Over the years, a gap has emerged between MFs and PMS in terms of portfolio flexibility, creating an opportunity for a new investment product. To bridge this gap, the SEBI (Mutual Funds) Regulations, 1996 have been amended to introduce the broad regulatory framework for the new investment product,” the market regulator said releasing guidelines for the same on Thursday evening.
The circular will come into effect from April 1, 2025.
Who is eligible to launch Specialised Investment Funds (SIF)?
Mutual Funds that have been in operation for a minimum of three years and have averaged assets under management of not less than Rs 10,000 crore, immediately preceeding three years, can launch such funds.
Alternatively, the asset management company may have appointed a chief investment officer for the SIF with a fund management experience of at least 10 years and has managed average AUM of not less than Rs 5,000 crore. An additional fund manager with at least three years of fund management experience and has managed average AUM of not less than Rs 500 crore will also be required.
The asset management firm will have to ensure that the SIF has distinct identification separately from the mutual fund to maintain clear differentiation between the offerings of the SIF and MF, SEBI said.
The SIF will also need to have a distinct brand name and logo than the regular mutual fund. However, the regulator has permitted the use of the sponsor’s or mutual fund’s brand name to facilitate the establishment and initial recognition of the SIF brand.
Where can the SIF invest?
According to the regulations issued by SEBI, a SIF can have equity-oriented investment strategies, including an equity LongShort fund, where minimum 80 per cent will be in equity related instruments and maximum 25 per cent short exposure through unhedged derivative positions in equity.
An SIF can also have a ex-Top 100 LongShort Fund, where minimum 65 per cent is invested in stocks, excluding the top 100 stocks by market capitalisation. It can also launch a sector rotation LongShort Fund.
SIF could also have debt-oriented funds across investing in debt instruments across durations.
SEBI has also allowed an SIF to launch hybrid strategies, including active asset allocator funds and hybrid funds.
Minimum Investment Limit
An SIF will not accept less than Rs 10 lakh from an investor across all investment strategies. This minimum investment threshold will have to be monitored by the AMC on a daily basis.
The AMC may offer systematic investment options such as SIP (systematic investment plan), SWP (systematic withdrawal plan) and STP (systematic transfer plan) for investment strategies launched under the SIF.
To provide an exit option for the redeeming investors, the units of all close-ended and interval investment strategies of SIF shall be mandatorily listed on recognized stock exchanges.