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SEBI has introduced a new asset class called Specialized Investment Fund (SIF), which will have more flexibility than a regular mutual fund scheme and lower ticket size than PMS and AIFs.
The minimum investment amount for investors in SIF will be Rs.10 lakh. However, such a limit will not be applicable for accredited investors. Accredited investors are those investors who have a better understanding of risks and returns associated with financial products. These investors have a higher financial capacity and a greater ability to absorb loss.
Under SIF, existing mutual funds can launch multiple categories of schemes.
While there is no need to segregate both activities - MF and SIF, a clear distinction has to be maintained between branding and advertisement of both the products. Also, fund houses will have to create a separate website and identity to launch SIF.
Here are other key features of the SIF:
- SIF will have TER structure like mutual funds i.e. the existing AUM slab wise TER
- SEBI will issue a detailed criteria to launch SIF
- Fund houses can launch SIF after taking approval from SEBI through draft offer document
- Fund manager managing SIF should have relevant NISM certification as specified by SEBI
- Fund houses can launch close ended, open ended and interval strategies under the SIF
- SIF can invest up to 20% of the NAV in money market and non-money market debt securities, which are not rated below investment grade. Such a limit can be extended to 25% after taking approval from the trustees
- Such a limit will not be applicable for government securities or debt ETFs
- SIF can have up to 15% exposure to paid up capital voting rights of any company
- In equity, SEBI has kept the single issuer limit similar to mutual funds at 10% of the NAV
- SIF can invest up to 20% of the NAV in REITs and InvITs. Single issuer limit on these instruments will be 10% of the NAV
- Trustees will have to ensure setting up internal control and risk management mechanism to manage investment
- Trustees will be held responsible for investor protection, disclosures and reporting
- SIF will have to disclose risks and disclose adequate information to investors to help them make informed decision
