The Securities and Exchange Board of India (Sebi), our market regulator, has just introduced a new investment option called the Specialized Investment Fund (SIF). This fund sits between portfolio management services (PMS) and mutual funds, making it easier for investors to choose their investment style.
You can invest in SIF if you have at least Rs 10 lakh, but if you’re an accredited investor, there’s no minimum amount needed. The fund managers in charge of SIF will need to have specific certifications to ensure they know what they are doing.
SIFs can use different ways to invest, like open-ended, close-ended, or interval strategies, and they should clearly explain how you can join or leave the fund in their offer documents. The fees for these investments will follow existing mutual fund rules.
However, there are some rules about where SIFs can invest. They can’t put more than 20% of their total value into risky debt from a single company unless they get special permission. Investments in government securities or treasury bills are safe and don’t count towards these limits.
Also, SIFs can own no more than 15% of any company’s voting shares. For example, if another mutual fund has 10% ownership in a company, a SIF can own a maximum of 5%. Furthermore, they cannot invest more than 10% of their total value in any one company’s stocks.
SIFs are also allowed to buy Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) but with some limits. They can own no more than 20% of units issued by a single REIT or InvIT. This includes limits set for mutual fund schemes.
Sebi created this new investment option for people who are willing to take higher risks with their money.
(Disclaimer: The views and suggestions from experts are their own and do not reflect those of thellv.news)
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