MFDs will have to clear NISM examination to sell SIFs

Existing MFDs will have to appear for NISM Series XIII: Common Derivatives Certification Examination to sell Specialised Investment Funds (SIFs).

AMFI will have to ensure compliance of distributors with this regulation.

Further, SEBI has allowed fund houses having at least Rs.10,000 crore AUM to launch long short SIFs across 7 categories- equity, debt and hybrid.

Within equity long short funds, fund houses can launch equity long short funds, equity ex-top 100 equity long short funds and sector rotation long short funds.

While equity long short funds can invest 80% of the total corpus in equity instruments, equity ex-top funds 100 long short funds can invest at least 65% of the corpus in companies beyond top 100 companies based on market capitalization. On the other hand, sector rotation long and short funds can invest at least 80% in up to four sectors.

All equity long short funds can invest upto 25% in unhedged securities.

In debt funds, fund houses can launch debt long short funds (can invest across duration) and sector debt long and short funds (can invest 75% of the total corpus in at least two sectors).

Within hybrid long short funds, fund houses can launch active asset allocator long short sectors(can invest across equity, debt, derivatives and REITs/ InvITs) and hybrid long short funds (can invest at least 25% each in equity, debt and derivatives).

Here are the key features regarding the SIFs.

Fund structure

SIFs can either be open-ended or close-ended schemes.

Minimum investment

The minimum investment limit of SIFs is Rs.10 lakh.

SIPs in SIFs

SEBI has allowed fund houses to offer SIPs, STPs and SWPs in SIFs. However, the minimum investment limit of Rs.10 lakh can not be breached.

Eligibility criteria

• The mutual fund should be in operation for a minimum 3 years with an AUM of at least Rs. 10,000 crore
• No action should have been initiated or taken against the fund house under section 11, 11B, and/or Section 24 of the SEBI Act, 1992 during the last 3 years
• The CIO of the SIF should have an experience of minimum 10 years and should have managed an average AUM of minimum Rs. 5,000 crore
• The additional fund manager should have a minimum experience of 3 years and had managed AUM of minimum Rs. 500 crore

Risk band in SIFs

SEBI has asked AMFI to develop a risk band in SIFs with risk level 1 considered as lowest risk and risk level 5 as highest risk.

AMFI to issue final guidelines on risk band framework by March 31, 2025.

All the regulations will come into effect from April 1, 2025.