Specialized Investment Fund: The Securities and Exchange Board of India (SEBI) has announced a new investment option, Specialized Investment Fund (SIF). This fund is a new option between Mutual Fund (MF) and Portfolio Management Services (PMS), which provides both flexibility and security to investors. This new fund will come into effect from April 1 and will allow investors to invest in different strategies like equity, debt, and hybrid. Let us know about this new fund in detail.

SEBI has issued final guidelines for the Specialized Investment Fund (SIF). SIF aims to meet the needs of investors who want more flexible and less risky options than mutual funds and PMS.

SIF will start from April 1, and for this, SEBI has amended the Mutual Fund Regulations, 1996. Asset management companies (AMCs) can set up SIFs in two ways: First, if the AMC has been operating for more than three years, it must have an average assets under management (AUM) of Rs 10,000 crore over the last three years. Second, the AMC must appoint a chief investment officer (CIO) who has at least 10 years of experience and a record of managing an AUM of Rs 5,000 crore.

Three types of investment strategies
SIFs can offer three types of investment strategies: equity-oriented, debt-oriented, and hybrid. Equity-oriented include equity long-short funds and sector rotation funds. Debt-oriented strategies include debt long-short funds and sectoral debt funds. Hybrids include active asset allocator funds and hybrid long-short funds.

The minimum investment amount for investors is Rs 10 lakh. If the investor's investment goes below this amount, he will have to withdraw the entire amount. Investment in derivatives is also allowed in SIF, but the short position cannot exceed 25%.

SIF investment limits

There are some limits on investment in SIF. A maximum of 20% can be invested in bonds with an AAA rating, 16% with an AA rating, and 12% in an A rating or less. If the trustee allows, an additional exemption of 5% can be given. The maximum limit of investment in any one sector is 25%.

SIF can invest up to a maximum of 25% in derivatives without hedging. This investment is done as per the derivatives rules of mutual funds. SIF can accommodate only those derivatives which have the same stock and expiry date.

Investors can invest in SIF daily, weekly, monthly, or for a fixed time. For withdrawal, one may have to give up to 15 working days' notice. If the SIF is closed-ended or interval-based, it is necessary to list it on the stock exchange so that investors can easily withdraw money.

The SIF has to adopt a standard market index like the Nifty 500 or BSE Sensex for its ranking. As per SEBI rules, portfolio information has to be given every two months and potential risks have to be noted in advertisements. Like mutual funds, SIFs also have to adopt a scale to show the risk level.

Who can sell SIF?
Any person who can sell a mutual fund can also sell SIF. For this, he has to pass the Series-XIII examination of NISM (National Institute of Securities Markets). AMFI and AMC will ensure that their distributors follow this rule.