The Securities and Exchange Board of India (SEBI) has introduced a new investment vehicle known as Specialised Investment Funds (SIFs). These funds are designed to bridge the gap between traditional mutual funds and portfolio management services (PMS), catering to high-net-worth individuals (HNIs) and experienced investors seeking advanced and flexible investment strategies.​

SEBI Receives Applications for SIFs

SEBI Chairman Tuhin Kanta Pandey announced that the regulator has received two applications from mutual fund asset management companies (AMCs) for launching SIFs. These applications are expected to be cleared within 10 days, marking a significant step in the introduction of SIFs to the Indian investment landscape.​

Key Features of SIFs

• Investment Strategies: SIFs can employ a variety of strategies, including equity long-short, debt long-short, and hybrid approaches, providing investors with diversified options.​

• Fund Structure: These funds can be structured as open-ended, closed-ended, or interval funds, offering flexibility in investment horizons and liquidity.​

• Minimum Investment: A minimum investment of ₹10 lakh is required across all strategies offered by an AMC, applicable at the Permanent Account Number (PAN) level. Accredited investors are exempt from this threshold.​

Eligibility Criteria for AMCs

To launch SIFs, AMCs must have a track record of at least three years and maintain an average Assets Under Management (AUM) of ₹10,000 crore over the last three years. Additionally, both the AMC and its sponsor must have a clean regulatory record during this period.​

Risk Mitigation Measures

SEBI has implemented strict exposure limits to mitigate risks associated with SIFs:​

• Issuer Exposure: Investments in company debt securities are capped at 20% for AAA-rated, 16% for AA-rated, and 12% for A-rated or below from any single issuer.​

• Sector Exposure: Investments are restricted to 25% of a fund’s net asset value in any single sector.​

Standardised Application and Disclosure Formats

SEBI has introduced a standardised format for applications and the Investment Strategy Information Document (ISID) for SIFs. This ensures uniformity and streamlines the processing of applications. AMCs are required to disclose performance data, portfolio holdings, sector-wise allocation, and portfolio turnover rates, enhancing transparency for investors.​

Conclusion

The introduction of SIFs represents SEBI's commitment to providing sophisticated investment avenues for HNIs and experienced investors. By establishing clear guidelines and risk mitigation measures, SEBI aims to ensure that these funds operate within a robust regulatory framework, offering both flexibility and protection to investors.​

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