Kolkata: With the final guidelines and framework ready for the new asset category, Specialised Investment Fund or SIF, is ready for launch from the first day of the new financial year. The idea was first unveiled in July last year in a consultation paper by market regulator Sebi. SIF is supposed to bridge the gap between mutual funds which can accept an investment of Rs 250 a month and portfolio management services, or PMS, which are beyond the reach of anyone who cannot invest a minimum of Rs 50 lakh in it. The requirement for Alternate Investment Funds is Rs 1 crore.
With this new asset class, the market regulator wanted to ensure that money doesn’t flow out to riskier assets such as cryptocurrency etc. The amount of Rs 10 lakh is not as prohibitive as Rs 50 lakh as in PMS or Rs 1 crore as in AIF. SIF was, therefore, thought of to serve this strategic objective, said experts.
What is SIF
SIF, an abbreviation for Specialised Investment Fund, is a new class of investment product conceptualised by capital market regulator Sebi. In a sense it is also an outcome of the explosive growth of the financial markets in the country where millions of new investors are joining regularly to gain from inflation-beating returns. They are embracing varying degrees of risk and complexity and this asset class is designed too straddle the middle ground between PMS and mutual funds. After the final guidelines from Sebi, the Association for Mutual Funds in India (AMFI) is also expected to bring out the operational framework.
Investment strategy
According to reports, Sebi has laid down three types of investment strategies — Equity-oriented strategy, Debt-Oriented Strategy and Hybrid Strategy. Equity-oriented strategy will consist of Equity Long-Short Funds and Sector Rotation Funds. The Equity Long-Short Fund is supposed to invest a minimum of 80% in equities and has a 25% short cap. The Equity Ex-Top 100 Long-Short Fund will exclude large-cap stocks and is expected to maintain 65% equity exposure. The Sector Rotation Long-Short Fund has been designed to focus on a maximum of four sectors.
Debt-Oriented Strategy will encompass Debt Long-Short Funds and Sectoral Debt Funds. These will invest in fixed-income securities. Debt Long-Short Fund will have exposure across durations. The Sectoral Debt Long-Short Fund will concentrate on two sectors or more. The exposure to each sector will be limited to 75%.
Hybrid Strategies will include Active Asset Allocator Funds and Hybrid Long-Short Funds. Hybrid Strategies, as the name indicates, will have multiple asset classes. Active Asset Allocator Long-Short Fund will put investments across equity, debt, REITs and commodities and the composition will be dynamic. Hybrid Long-Short Funds would have a floor of 25% investment in equity and debt.
Minimum investment
Rs 10 lakh is the minimum investment in SIF for one investor. Rules state that if an investor’s total investment goes below Rs 10 lakh, he/she should redeem the entire investment. SIP (Systematic Investment Plan), STP (Systematic Withdrawal Plan) and SWP (Systematic Withdrawal Plan) are allowed as in mutual funds. But the Rs 10 lakhi floor is to be followed in each case. SIF investors will also have flexible subscription/redemption systems — daily, weekly, monthly, or fixed maturity-based redemptions. A notice period of up to 15 working days has to be given.
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Market regulator Sebi has laid down three types of investment strategies — Equity-oriented strategy, Debt-Oriented Strategy and Hybrid Strategy. Like mutual funds SIP (Systematic Investment Plan), STP (Systematic Withdrawal Plan) and SWP (Systematic Withdrawal Plan) are allowed. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
