The Securities and Exchange Board of India (SEBI) introduced a new regulatory framework aimed at establishing Specialized Investment Funds (SIFs) in India. The framework aims to bridge the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS), introducing a new product category designed for more sophisticated investment needs.
What are Specialized Investment Funds (SIFs)?
SIFs are an innovative category of investment vehicles introduced by SEBI to address the limitations of existing products. The new framework allows registered Mutual Funds to establish SIFs, provided they meet certain eligibility criteria. These criteria ensure that only experienced and well-capitalized asset management companies (AMCs) are permitted to launch these funds. SEBI has carefully structured the eligibility requirements to ensure that the entities behind SIFs have the necessary expertise, operational capability, and financial resources to manage sophisticated investments
For instance, to establish a SIF under “Route 1,” an AMC must have been operational for at least three years, with a minimum average asset under management (AUM) of INR 10,000 crores over the last three years. Alternatively, under “Route 2,” the AMC must appoint experienced fund managers with proven track records in managing significant assets. This ensures that the management of SIFs is handled by seasoned professionals capable of navigating more complex investment strategies.
The new framework will come into effect on April 1, 2025, with the Association of Mutual Funds in India (AMFI) expected to issue necessary guidelines by March 31, 2025.
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