New Specialized Investment Fund Suitable for upper middle-class investors…!
SEBI's new asset class 'Specialized Investment Fund' will open up new opportunities for mutual fund distributors and mutual fund companies & manufacturers.
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.
Minimum investment Rs.10 lakh
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
Mutual Fund houses can launch SIF after taking approval from SEBI through draft offer document
Mutual Fund manager managing SIF should have relevant NISM certification as specified by SEBI
Mutual 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 fund, 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 & 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 decisions.
Upper middle-class investors…!
SIFs will allow the MF industry to cover the entire spectrum of risk-reward profiles. The Rs.10 lakh limit means that SIF is not a product for retail investment rather it is a product for India's continuously growing upper middle-class investors.
By Mr. S.Sridharan, Founder, https://www.walletwealth.co.in/
If you need any advice on investments, do call us at 9940116967.
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Ph: 044-48612114
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Email id : sridharan@walletwealth.co.in
You can contact Mr.S.Sridharan for all types of investments including mutual fund investment, medical insurance, and life insurance.
Read articles written by Mr. S. Sridharan in Nanayam Vikatan, a leading personal financial management magazine.
https://www.vikatan.com/author/855-sridharan-s
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes.
