Sebi rolls out Specialised Investment Fund for HNIs with Rs 10 lakh minimum
New Delhi, Dec 18, 2024
No SIF can allocate more than 20 per cent of its net asset value (NAV) to debt instruments issued by a single issuer, which are not rated below the investment grade.
Market regulator Securities and Exchange Board of India (Sebi) on Tuesday notified a new asset class between portfolio management services (PMS) and mutual funds and has called it the 'Specialized Investment Fund' (SIF). The SIF asset class will accept investments of Rs 10 lakh or more across all investment strategies.
This newly launched class aims to fill the space between mutual funds and PMS, offering a flexible and specialized option for investors who are willing to make riskier bets and seek higher returns. But why is this necessary? What gap does it fill, and why should investors take notice?
Why the Need for SIFs?
For many ambitious investors, mutual funds and PMS have long been the go-to investment options. Mutual funds have provided a more hands-off, diversified way to invest, while PMS has catered to those willing to invest larger sums with personalized strategies. However, there has always been a gap between the two.
The minimum investment threshold of Rs 10 lakh ensures that these funds remain focused on high-net-worth individuals (HNIs) or accredited investors who have the financial capacity and expertise to manage such investments. These investors are looking for higher returns and are comfortable with more volatile asset classes.
"SEBI's newly introduced Specified Investment Fund (SIF) marks a significant evolution in India's investment landscape, offering enhanced flexibility for portfolio managers and broader opportunities for high-net-worth individuals (HNIs) and experienced investors. With a minimum investment ceiling of Rs 10 lakh, SIFs allow asset managers to allocate up to 15% in a single security—significantly higher than the 10% limit under traditional mutual fund schemes. For fixed income strategies, exposures can now extend to 20% in a single issuer, with the possibility of increasing this to 25% through board approvals," said Santosh Joseph, Co-founder and CEO of Germinate Investor Services.
[The Business Standard]
