SEBI Introduced Specialised Investment Funds (SIFs)

The Securities and Exchange Board of India (SEBI) has launched a new asset class, Specialised Investment Fund (SIF), aimed at informed investors willing to explore riskier investment options, along with simplified Mutual Fund Lite regulations to promote passively managed funds.

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Key Features of Specialised Investment Fund (SIF)

• Definition:
  SIF bridges the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS) by offering structured investment opportunities to investors seeking higher risk exposure.
• Eligibility:
  • Minimum investment requirement of ₹10 lakh.
  • Lower thresholds apply for accredited investors.
• Investment Options:
  SIFs provide diverse strategies, including:
  • Open-ended funds (allowing regular entry/exit).
  • Close-ended funds (fixed tenure).
  • Interval funds (permit redemption at specific intervals).

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Understanding Asset Classes

• Definition: An asset class represents a group of investments with shared characteristics and regulatory frameworks.
• Examples:
  • Equities (stocks).
  • Fixed income (bonds).
  • Cash and cash equivalents.
  • Real estate, commodities, and currencies.

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Comparison of SIF, MFs, and PMS

Feature	Mutual Funds (MFs)	Portfolio Management Services (PMS)	Specialised Investment Fund (SIF)
Target Audience	Retail and small investors	High-net-worth individuals (HNIs)	Informed investors
Customization	No customization; pooled investments	Fully customized portfolios	Limited customization
Entry Requirement	Low (e.g., ₹500-₹5,000)	High (₹50 lakh minimum)	₹10 lakh (lower for accredited)
Risk & Return	Moderate risk, diversified	Higher risk, tailored strategies	Higher risk, flexible strategies
Fee Structure	Lower fees	Higher fees for professional management	Moderate fees

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Introduction of Mutual Fund Lite Regulations
SEBI has introduced simplified regulatory norms under Mutual Fund Lite to encourage broader participation in passively managed funds, such as:

• Exchange-Traded Funds (ETFs).
• Index Funds.

Key Objectives:

• Lower compliance burdens for fund managers.
• Reduce entry barriers to attract new players.
• Promote ease of doing business in the mutual fund sector.

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Significance of SEBI’s Initiatives

• Diverse Investment Opportunities: SIF offers tailored options for informed investors seeking exposure to higher-risk assets.
• Boosting Passive Investments: Mutual Fund Lite regulations aim to increase accessibility to passively managed funds, fostering financial inclusion.
• Encouraging Innovation: By lowering compliance hurdles, SEBI promotes innovation and competition in the investment management industry.

These initiatives reflect SEBI’s commitment to enhancing market dynamics, catering to diverse investor profiles, and strengthening India’s financial ecosystem.