In December 2024, the Securities and Exchange Board of India (SEBI) notified a new asset class “Specialised Investment Fund (SIF)” between Portfolio Management Services (PMS) and Mutual Funds (MFs). As per the SEBI directions, the new asset class will accept investments of Rs 10 lakh or above across all investment strategies. However, accredited investors are exempted from the requirement of minimum investment amount.
- The primary objective of introducing this new asset class is to bridge the gap between MFs and PMS, while ensuring robust risk management and investor protection.
- The notification came following the amendment made to the SEBI (Mutual Funds) Regulations, 1996.
Key Points:
i.As per the new rules, it is mandatory for the fund manager of SIFs to have the relevant National Institute of Securities Market (NISM) certification.
- The fees and expenses for the investment strategies launched under the SIF will be issued in accordance with Regulation 52 of the MF regulations.
ii.It has allowed that investment strategy in SIF can be an open-ended investment strategy or close-ended investment strategy or interval investment strategy with subscription and redemption frequency appropriately disclosed in the offer document.
iii.As per the new SIF regulations, an investment strategy is not allowed to invest more than 20% of its Net Asset Value (NAV) in debt instruments including money market instruments as well as non-money market instruments issued by a single issuer and are not investment grade.
- However, it is possible to extend the investment limit up to 25% of the NAV of the investment strategy with prior approval of the Board Trustees and Board of Directors of the Asset Management Company (AMC).
- Government securities (G-secs), treasury bills and triparty repo on G-secs or treasury bills are exempted from any such investment restrictions.
iv.For equity investments, the investment limit on single-company exposure is set at 10% of the total assets. But, the ownership limit for a company has been increased to 15%.
- Thus, investment limit of SIFs should not exceed 15% of the company’s paid-up capital with voting rights and also they are not allowed to invest more than 10% of its NAV in the equity shares and equity-related instruments of any company.
v.SIFs are allowed to allocate maximum 20% of their assets to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), but their investment should not exceed 10% in any single issuer.
Note: Like MF schemes, the new asset class will provide investors with an option of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), and Systematic Transfer Plan (STP).
Related News:
On December 10 2024, SEBI issued a circular to expand the scope of optional T+0 rolling settlement cycle in equity cash market. As per SEBI’s directions, optional T+0 settlement cycle will be made available to top 500 scrips in terms of market capitalization as on December 31, 2024.
- All the provisions related to the availability of eligible scrips will come into effect from January 31 2025, while provisions related to Qualified Stock Brokers (QSBs) and custodians and block window mechanism will be applicable from May 1 2025.
About Investment Limits of PMS, MF and Alternative Investment Funds:
Mutual Funds – Minimum Investment Limit Rs 100
Portfolio Management Services – Minimum investment limit Rs 50 lakh
Alternative Investment Funds – Floor investment Rs 1 crore
