What's Specialized Investment Fund, new asset class notified by SEBI
What's the story
In a major development, the Securities and Exchange Board of India (SEBI) has announced the introduction of a new asset class, the 'Specialized Investment Fund' (SIF).
The new category falls between portfolio management services (PMS) and mutual funds.
The minimum investment for SIFs is ₹10 lakh. However, this requirement is waived off for accredited investors.
Regulatory requirements
SIF fund managers must hold NISM certification
Fund managers of SIFs will have to hold relevant National Institute of Securities Markets (NISM) certification.
The introduction of SIF comes as part of amendments to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
SIFs can follow open-ended, close-ended, or interval investment strategies, with details of subscription and redemption disclosed in the offer document.
Investment limits
SEBI sets investment restrictions for SIFs
SEBI has imposed certain investment restrictions for SIFs.
These include a 20% of net asset value (NAV) cap in non-investment grade debt instruments from a single issuer, extendable to 25% with board approval.
Government securities and treasury bills are not included in these limits.
Additionally, no single investment strategy within an SIF can invest more than 10% of its NAV in any company's equity shares or related instruments.
Investment opportunities
SIFs can invest in REITs and InvITs
SIFs can invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) but cannot own more than 20% of units from a single issuer (including mutual fund limits).
Proposed by SEBI in July, this new asset class is for investors willing to take higher risks.
The regulator has now officially notified the new category, marking a major development in India's investment landscape.