The Securities and Exchange Board of India (SEBI) has notified norms for the introduction of a new asset class – ‘Special Investment Funds (SIF)’ – which aims to bridge the gap between mutual funds (MFs) and portfolio management services (PMS). .
The regulator also notified mutual fund lite rules for passively managed mutual fund schemes. Both the notifications are brought through amendments in Mutual Fund Rules.
The SIF, which received regulatory approval in September this year, will have a minimum investment limit of Rs 10 lakh, according to an official gazette issued on Monday (Dec 16).
Under the new asset class, mutual funds will be allowed to launch open-end, close-end and interval investment strategies with subscription and redemption frequency appropriately disclosed in the offer document.
No scheme under SIF shall invest more than 20 per cent of its NAV (Net Asset Value) in debt instruments including money market instruments and non-money market instruments issued by a single issuer not rated below investment grade by credit rating. Agency.
However, with the prior approval of the Board of Trustees and Board of Directors of the asset management company, the investment limit can be extended up to 25 percent of the NAV of the investment strategy.
The 20 percent limit will not apply to investments in government securities, treasury bills and tripartite repos on government securities or treasury bills.
“No specialized investment fund shall own more than fifteen percent of the paid-up capital of any company carrying voting rights under all its investment strategies,” the notification said.
All schemes under SIF will not be permitted to invest more than 10 per cent of their NAV in equity shares and equity-related instruments of any company.
The regulator said asset management companies should ensure that SIFs have a separate identity from mutual funds to maintain a clear distinction between the new asset class and mutual fund offerings.
“The asset management company shall follow the provisions relating to branding, advertisement, standard disclaimer, sponsor or brand name of the asset management company or mutual fund and maintenance of separate website, as prescribed by the board from time to time,” the notification said.
The regulator further said that for an applicant to start a mutual fund lite asset management company (AMC), the sponsor must have a sound track record and a general reputation of fairness and integrity in all business transactions and must have contributed at least 40 per cent. Net worth of AMC.
The regulator said mutual fund lite asset management companies should have a net worth of at least Rs 35 crore in assets. However, if there is a profit for five consecutive years, the net worth can be reduced by Rs 25 crore.
MF Lite Rules are intended to reduce compliance requirements, increase penetration, facilitate investment diversification and promote innovation.
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