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SEBI has released a circular detailing the standardized format for the Investment Strategy Information Document (ISID) that AMCs must prepare for Specialized Investment Funds (SIFs).
This move is aimed at ensuring transparency and helping investors better understand the risk, strategy and structure of these schemes.
SEBI mandates the ISID to be divided into three key parts, each designed to enhance investor clarity:
Part 1: Basic Scheme Information
This section will include:
- Scheme name and type (Equity/debt/hybrid, Open/close-ended)
- Risk level and benchmark
- Investment objective
- Liquidity and listing information
- NAV disclosure timing
- NFO details – Opening, closing, and reopening (for closed-ended/interval schemes)
- NFO price
- Scheme modes – Regular and direct
- Available investment options – SIP, STP, SWP
- Exit load and minimum application amount
- Whether the scheme will engage in:
- Short-selling
- Swing pricing
Part 2: Investment Strategy and Allocation
This part provides deeper insight into the scheme’s approach, including:
- Maximum and minimum asset allocation across instruments like:
- Overseas securities
- Derivatives
- Securitized debt
- Repo transactions
- Instruments the scheme will invest in or avoid
- Benchmark name and justification
- Investment strategy manager(s) details
- Comparison with existing strategies
- Scheme performance overview
- Skin in the game of the fund manager
Part 3: Financial Computation and Expenses
Investors will find information about:
- NAV computation
- NFO-related expenses
- Recurring expenses
- Load structure
Mandatory Disclaimers
The ISID must contain clear disclaimers alerting investors to higher risks, including:
- Capital loss
- Liquidity issues
- Market volatility
Instructions for AMCs
- The SIF can choose to add any other disclosure which the trustees or AMC decide
- AMCs should ensure that ISID is simple in language and easy to understand
- The investment strategy cannot have a deceiving/misleading name and should be aligned with the stated investment policy
- AMCs should do proper due diligence to ensure accuracy of information in ISID
