Sebi amends mutual fund rules, introduces new asset class

Markets regulator Sebi has notified norms for introducing a new asset class -- Specialized Investment Fund -- for high-risk profile investors along with liberalised mutual funds lite (MF Lite) framework for passively managed schemes. Specialized Investment Funds (SIFs), which allow mutual funds to launch advanced investment strategies as open-ended, closed-ended and interval structures, will add depth and variety to the investment landscape of the country.
The minimum amount of Rs 10 lakh can be invested per investor, except for accredited investors, across all investment strategies of the new product in a particular AMC, Sebi said in a notification issued on Monday. The structure ensures limits on exposure to single issuers, companies, and sectors, maintaining risk controls. Also, Sebi has emphasised distinct branding, transparency and investor protection for these funds.The new product is intended to bridge the gap between mutual funds and portfolio management services in terms of flexibility in portfolio construction.Besides, it is aimed at curtailing the proliferation of unregistered and unauthorised investment schemes, which often promise unrealistic high returns and exploit investors' expectations for better yields, leading to potential financial risks.
"The asset management company shall ensure that the Specialized Investment Fund has distinct identification, separate from that of the Mutual Fund, to maintain clear differentiation between the offerings of the Specialized Investment Fund and that of a Mutual Fund," Sebi said.Additionally, the regulator has introduced a liberalised Mutual Funds Lite framework for passively managed schemes of mutual funds.