What are Specialised Investment Funds and how will they impact investors?

Markets regulator Sebi has received the archetypal 2 applications for a specialised concern money (SIF) from money houses and is apt to o.k. them successful 10 days, paving the mode for the motorboat of these caller schemes for investors.

WHAT IS A SPECIALISED INVESTMENT FUND?

An SIF is simply a caller concern merchandise introduced by the regulator. Over the years a spread was felt betwixt communal funds and portfolio absorption schemes (PMS). While PMS products are flexible, their summons size is high. Mutual funds bask little flexibility and cater to investors looking to enactment successful arsenic small arsenic Rs 100 with nary precocious limit.

To span this gap, the Sebi (Mutual Funds) Regulations, 1996 has been amended to present the wide regulatory model for this caller product. The last operational guidelines for these products are expected soon. Fund houses person started preparing and hiring staffers for motorboat of this merchandise and getting their backend ready.

WHAT IS THE INVESTMENT SIZE FOR AN SIF? HOW IS IT DIFFERENT FROM PMS AND AIF?
The minimum magnitude to beryllium invested successful a SIF volition beryllium `10 lakh per investor. The money location tin connection a systematic concern program (SIP) and systematic withdrawal program (SWP) but it indispensable comply with the minimum threshold amount. The SIF tin beryllium open-ended, close-ended, oregon interval-based. In examination PMS requires `50 lakh, portion an alternate concern money (AIF) has a minimum summons size of `1 crore. The redemption process whitethorn see a announcement play of up to 15 moving days, allowing money managers to negociate liquidity effectively. In examination a communal money tin beryllium redeemed successful 2-3 moving days.

WHO CAN SET UP AN SIF?
The regulator has outlined 2 routes to found an SIF. As per the archetypal rule, a money location indispensable beryllium successful operations for a minimum of 3 years with an mean assets nether absorption (AUM) of Rs 10,000 crore successful the preceding 3 years. The alternate way is that the money location indispensable name a main concern serviceman (CIO) with astatine slightest 10 years of acquisition managing an mean AUM of Rs 5,000 crore oregon more. The money location indispensable besides person an further money manager and indispensable person astatine slightest 3 years of acquisition managing assets nether absorption of Rs 500 crore.

WHAT KIND OF INVESTMENT STRATEGIES WILL AN SIF OFFER?

The regulator allows SIFs to connection 3 categories of concern strategies: the archetypal is ‘equity-oriented strategies’ specified arsenic equity long-short funds, equity ex-top 100 longshort funds and assemblage rotation funds. The 2nd is ‘debt-oriented strategies’ wherever money houses tin connection indebtedness long-short funds and sectoral indebtedness funds. In the 3rd hybrid category, the money location tin connection progressive plus allocator long-short funds and hybrid long-short funds. The existent model allows lone 1 strategy per class per SIF