The Securities and Exchange Board of India (SEBI) has introduced a new category of investment vehicles called Specialized Investment Funds (SIFs) to bridge the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS). These funds offer enhanced portfolio flexibility while maintaining regulatory oversight. The framework, effective from April 1, 2025, aims to provide investors with additional investment options with varying risk-return profiles.
Key Highlights of the Regulatory Framework
1. Eligibility Criteria for SIFs
Mutual Funds seeking to establish an SIF must meet one of the following eligibility criteria:
Route 1 - Sound Track Record:
Operate for at least three years with an average AUM of ₹10,000 crores.
No regulatory action taken against the sponsor/AMC in the past three years.
Route 2 - Alternate Route:
Appointment of a CIO with at least 10 years of fund management experience and an AUM of ₹5,000 crores.
Appointment of an additional fund manager with three years of experience managing an AUM of ₹500 crores.
No regulatory action in the past three years.
AMCs can share operational resources across MFs and SIFs.
2. Branding and Advertisement Guidelines
SIFs must have a distinct brand name and logo separate from the MF brand.
For the first five years, the sponsor’s brand name may be used with phrases like “brought to you by” or “offered by.”
The SIF’s brand name must be more prominent than the sponsor’s brand in all marketing materials.
A separate website or dedicated webpage must be maintained for SIFs.
3. Investment Strategies
SEBI has approved specific investment strategies under three broad categories:
Equity-Oriented Strategies (e.g., Equity Long-Short Fund, Sector Rotation Long-Short Fund).
Debt-Oriented Strategies (e.g., Debt Long-Short Fund, Sectoral Debt Long-Short Fund).
Hybrid Strategies (e.g., Active Asset Allocator Long-Short Fund, Hybrid Long-Short Fund).
Each AMC can launch only one strategy under each category.
4. Minimum Investment Threshold
Minimum investment per investor across all SIF strategies is ₹10 lakh.
Accredited investors are exempt from this requirement.
Systematic investment options like SIP, SWP, and STP are allowed while maintaining the minimum threshold.
5. Investment Restrictions
No more than 20% of NAV in AAA-rated debt securities from a single issuer.
No more than 25% exposure to a single sector.
Maximum 25% of net assets can be invested in derivatives for non-hedging purposes.
6. Subscription and Redemption Policies
SIFs may offer various subscription and redemption frequencies (daily, weekly, monthly, etc.).
Notice periods for redemptions can be up to 15 working days.
Close-ended and interval investment strategies must be listed on recognized stock exchanges.
7. Benchmarking of Investment Strategies
A single-tier benchmark structure is mandatory.
Equity strategies should be benchmarked against broad market indices like NSE Nifty.
Debt strategies should use an appropriate debt market index.
8. Distribution of SIFs
Mutual Fund distributors must pass the NISM Series-XIII: Common Derivatives Certification Examination to distribute SIFs.
9. Disclosure Requirements
Portfolio disclosure every alternate month on AMC and AMFI websites.
Scenario analysis for derivatives in offer documents.
Advertisements must include a standard disclaimer on risks.
10. Risk-Band Classification
Similar to mutual fund schemes, a five-level risk band (Lowest to Highest Risk) will be implemented.
Risk bands will be evaluated monthly and disclosed publicly.
Conclusion
The introduction of SIFs marks a significant development in India’s investment landscape, providing investors with greater flexibility while maintaining regulatory safeguards. With structured eligibility criteria, clear branding rules, and comprehensive investment strategies, SIFs are set to become a valuable addition to the Indian financial market.
Comments
Post a Comment