In With The New

Four fund houses have already secured licences for the newest asset class, specialised investment funds, and more are set to follow

- RIDDHIMA BHATNAGAR

MUTUAL FUNDS (MFS) are gearing up to launch Specialised Investment Funds (SIFS), an asset class that received the approval of the capital markets regulator Securities and Exchange Board of India (Sebi).

These new investment vehicles bridge the gap between mutual funds and portfolio management services (PMS). They have a minimum investment size of 10 lakh compared to MFs, which have a minimum ticket size of 500 or lesser. At the upper end, there are alternative investment funds (AIFS) that have a minimum investment of *1 crore and PMS' with 50 lakh.

SIFS offer more flexibility than MFs and are more regulated than PMS, and cater to high networth individuals, institutions and family offices. They combine the transparency, tax efficiency and regulatory oversight of MFs with the strategic flexibility of Category III AIFs, allowing them to invest in derivatives and take short positions. However, they will be taxed like MFs, where gains are only taxed at redemption.

Sebi has introduced seven strategies under the SIF category, three in equity, two in hybrid, and two in debt. They can invest up to 25% of the portfolio in derivatives.