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What is Specialized Investment Fund (SIF)

What is Specialized Investment Fund (SIF)

SEBI rolls out Specialized Investment Fund with Rs.10 lakh minimum investment.

What is Specialized Investment Fund?

This newly launched class aims to fill the space between mutual funds and PMS, offering a flexible and specialized option for investors who are willing to make riskier bets and seek higher returns.

Specialized Investment Fund

Why the Need for SIFs?

Mutual funds, by nature, attract a wide range of investors and are governed by strict regulations to ensure broad accessibility and safety. They are more suitable for conservative investors or those with a lower risk appetite. 

On the flip side, PMS offers tailored strategies but typically requires a significant minimum investment (Rs.50 lakhs and above) often too large for smaller investors, and with a complexity that may seem daunting for those without deep financial expertise. 

This is where the SIF comes in.

SIFs are designed for those who are more informed about the market, willing to take on a higher level of risk for the potential of higher rewards. With a minimum investment of Rs.10 lakh, the SIF bridges the gap between the mass-market mutual funds and the high-end, personalized PMS.

Features: 

  • Specialized Investment Fund (SIFs) allow asset managers to allocate up to 15% in a single security -significantly higher than the 10% limit under traditional mutual fund schemes.
  • For fixed income strategies, exposures can now extend to 20% in a single issuer, with the possibility of increasing this to 25% through board approvals. 
  • The investment strategy in SIF could be an open-ended investment strategy or close-ended investment strategy. 
  • Sebi has further directed asset management companies (mutual fund houses) to clearly distinguish SIFs from mutual funds through branding, advertising, disclaimer guidelines and by maintaining separate websites for the two investment options.

High-net-worth individuals (HNIs) who are looking for higher returns and are comfortable with more volatile asset classes can go for SIFs.
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