Sebi notifies SIF, new asset class between PMS and mutual funds with minimum investment of Rs 10 lakh

 

Key Points About Specialized Investment Fund (SIF)

Overview:

• New Asset Class: SIF offers more flexibility than regular mutual funds and requires a lower minimum investment compared to Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs).
• Minimum Investment: ₹10 lakh for regular investors. No limit for accredited investors with higher financial capacity and risk understanding.

Operational Features:

• Scheme Categories: Mutual funds can launch multiple categories under SIF.
• Segregation: No need to separate MF and SIF operations, but branding and advertisement must be distinct.
• Separate Identity: Fund houses must create a separate website and identity for SIF.

Key Regulations:

1. TER Structure: Similar to mutual funds with AUM slab-wise Total Expense Ratio (TER).
2. Approval: Fund houses need SEBI approval through a draft offer document to launch SIF.
3. Fund Manager: Must hold relevant NISM certification as specified by SEBI.

Investment Guidelines:

• Debt Investments:
  • Up to 20% of NAV in money and non-money market debt securities (not below investment grade).
  • Limit extendable to 25% with trustee approval.
  • No limit for government securities or debt ETFs.
• Equity Investments:
  • Single issuer limit: 10% of NAV.
  • Up to 15% exposure to paid-up capital voting rights of a company.
• REITs & InvITs:
  • Up to 20% of NAV; single issuer limit: 10% of NAV.

Strategy Options:

• SIF allows close-ended, open-ended, and interval strategies.

Risk Management & Governance:

• Trustees must:
  • Establish internal control and risk management mechanisms.
  • Be accountable for investor protection, disclosures, and reporting.
• Investor Information: SIF must disclose risks and provide adequate information to help investors make informed decisions.

Launch Criteria:

• SEBI will release detailed criteria for launching SIF.

This framework makes SIF a versatile investment option catering to high-net-worth and accredited investors while maintaining transparency and risk control.