Specialised Investment Funds

There has long been a need for a product similar to SIF, as investors have been looking for something more sophisticated than a standard mutual fund but more reasonably priced than PMS, which offers exotic strategies but maintains a minimum investment requirement of Rs 50 lakh per investor.
Additionally, the SIF will be set up similarly to a mutual fund, providing comparable investment and redemption processes as well as comparable tax treatment for the fund business that manages the assets and the final investor.
As each investor’s portfolio is managed separately, PMSs have developed into increasingly sophisticated products over time, particularly for the AMC.
SEBI has placed restrictions on the SIF in order to protect investor interest. These restrictions include a maximum of 10% investment at the fund level in any one listed firm and 20% for any debt security issuer. Treasury notes (T-bills) and government securities (G-Secs) are not subject to the limitations, though.
The National Institute of Securities Market (NISM) will require fund managers overseeing the SIF to hold a certification.
The SIF’s structure will enable the fund manager to optimise the risk-return profile by pursuing exposure to a more diversified asset exposure based on the market environment, in addition to strategies that seek excess returns through riskier investment bets or exotic derivative strategies.
Since SIFs will be structured like mutual funds, their fee schedule will function inside the mutual fund framework. The mutual fund laws’ Regulation 52 will govern the fees and costs associated with the investing strategies under SIF.