SEBI said in a notification that a minimum investment of Rs 10 lakh per investor can be made in all investment strategies of the new product in the respective asset management company (AMC).
This does not include accredited investors. SEBI has emphasized on separate branding, transparency and investor protection for these funds. Market regulator SEBI has amended the mutual fund rules and introduced new investment products. Under this, a liberalized ‘mutual fund lite’ framework has been introduced under index and exchange traded fund related schemes along with specialized investment funds for investors capable of taking high risk. Specialized investment funds (SIFs) allow mutual funds to introduce modern investment strategies. These will be for open ended schemes, fixed term schemes (close ended schemes) etc. This is expected to broaden and diversify the investment scenario in the country.
The Securities and Exchange Board of India (SEBI) said in a notification that a minimum investment of Rs 10 lakh per investor can be made in all investment strategies of the new product in the respective asset management company (AMC). This does not include accredited investors. SEBI has emphasized on separate branding, transparency and investor protection for these funds. The new product aims to bridge the gap between mutual funds and portfolio management services. Apart from this, it aims to reduce the spread of unregistered and unauthorized investment schemes.
Such schemes often promise unrealistically high returns. They exploit investors’ expectations for better returns, thereby creating potential financial risks. SEBI said, “Asset management companies will ensure that ‘Specialized Investment Fund’ is identified differently from mutual funds. That is, a clear distinction should be maintained between the new scheme and the offering of the mutual fund.” In addition, the regulator has introduced a liberalized mutual fund lite (MF lite) framework under the mutual fund’s index and exchange traded fund related schemes (passively managed funds).
The aim of this framework is to promote ease of entry, encourage new units, reduce compliance requirements, increase penetration, increase liquidity in the market, facilitate investment diversification and promote innovation. SEBI said in the notification that a mutual fund lite ‘asset management company’ must have a net worth of at least Rs 35 crore to invest in assets. It can be reduced to Rs 25 crore if there is profit for five consecutive years. SEBI has amended the mutual fund rules to make it effective.
