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Whole-time SEBI member Amarjeet Singh said at the AMFI Mutual Fund Summit 2025 that investor education and risk disclosure should be a priority for the mutual fund industry when rolling out the specialized investment fund (SIF).
Singh said that the SIF was brought in to fill the gap between mutual funds and PMS. "There is a gap between mutual funds and PMS in terms of portfolio flexibility, creating an opportunity for a new investment product. The absence of such a regulated investment product appears to have inadvertently propelled a segment of investors towards unregistered and unauthorized investment products which have been available on YouTube and other social media channels. And those products are risky, unregulated. To address this gap, SEBI has recently introduced a new asset class called the specialized investment fund under mutual fund structure." Singh said.
Singh also expanded on the recent NFO guidelines that stated that MFDs will get the lower commission if their clients switch to NFOs within same AMC, and the regulatory guideline that said AMCs must deploy NFO funds within 30 days, saying "Industry needs to ensure that there are mechanisms to guard against mis-selling or unethical practices".
Speaking on the Chhota SIP, which allows investments starting at Rs 250, the SEBI member said that disclosure is very important as the industry will have to explain to underprivileged people the risk associated with mutual fund investments. "Very clear and easy to understand, disclosures are very, very significant in the context of this particular product."
Singh urged that new investors must understand the risks and details of low-ticket investments, saying that all stakeholders, including MFDs, must act responsibly while introducing this product to ensure investors have a good experience to gain their confidence. He stressed the importance of clear disclosures and investor education. "The idea is to facilitate participation from low-income groups, sections of society and achieve the larger objective of financial inclusion," he added, "The experience has to be good on the front in terms of onboarding, in terms of staying on, in terms of the returns that are generated"
