SEBI has recently given the green light to mutual funds to introduce a new asset class called Specialised Investment Fund (SIF), which falls between a regular mutual fund scheme and PMS/AIFs in terms of investment requirement. The product is set to be launched from April 1, as per SEBI’s announcement.
Minimum Investment: The minimum investment amount for SIF is set at ₹10 lakh, lower than the ₹50 lakh required for PMS and ₹1 crore for AIF. However, it’s important to note that the minimum investment threshold of ₹10 lakh applies exclusively to investments under SIF and does not include investments in regular MF schemes of the same AMC. Fund houses can offer systematic investment options under SIF, similar to regular MF schemes.
Who can launch: Not all mutual funds can launch SIFs, as only those with at least three years of operation and an average AUM of ₹10,000 crore in the preceding three years are eligible. Newer entrants can launch SIFs after appointing a chief investment officer and a fund manager with the required experience.
Investment Strategy: SEBI has initially allowed fund houses to launch three schemes – Equity Long-Short Fund, Equity Ex-Top 100 Long-Short Fund, and Sector Rotation Long-Short Fund under Equity Oriented Investment Strategies. These strategies involve specific minimum investment percentages in equity and equity-related instruments, as well as short exposure limits.
Benchmark Indices: Benchmark indices for equity-oriented investment strategies under SIF should be compared against popular indices like BSE Sensex, NSE Nifty, BSE 100, or CRISL 500. Debt-oriented schemes like Debt Long-Short Fund and Sectoral Debt Long-Short Fund are also permitted, along with other hybrid funds.
Exit Option: Subscription and redemption frequency for SIF investments can vary based on the nature of investments, allowing fund managers to manage liquidity effectively. The frequency can range from daily to fixed maturity, depending on the investment strategy.
Investor Appeal: Initially, SIFs may not attract a large number of investors due to the lack of track record and the slightly higher entry amount of ₹10 lakh. However, with the rise of family offices, SIFs may find appeal among this investor segment.
Overall, the introduction of Specialised Investment Funds by SEBI aims to bridge the gap between traditional mutual funds and PMS/AIFs, offering investors a new asset class to explore.
