A tough test stands in the way of India’s ₹10 lakh-plus funds

Mutual funds are rolling out specialized investment funds (SIFs) with a minimum ₹10 lakh ticket size, but the product faces a distribution hurdle.

- Srushti Vaidya

Mutual funds are rolling out specialized investment funds (SIFs) with a minimum ₹10 lakh ticket size, but the product faces a distribution hurdle.

Only a fraction of India’s 180,000 mutual fund sellers are qualified to distribute this product to the end consumer, given the tougher derivatives exam required to sell them.

There is a mandatory hurdle to be cleared—the National Institute of Securities Markets’ NISM XIII (derivatives) exam to get a permit for SIF distribution. The exam is a tougher nut to crack as compared to the mutual fund distributor exam, the NISM VA, multiple industry participants told Mint.

There are over 1,000 distributors who have cleared the NISM XIII derivatives exam and applied for SIF registration as of 19 September, data by CAMS shows. The number of mutual fund distributors (MFD), on the other hand, is much higher at 180,000.

The Securities and Exchange Board of India had in February launched SIF to bridge the gap between retail-focused mutual funds and portfolio management services (PMS) that target the rich. SIF’s minimum ticket size is ₹10 lakh, while that for PMS is ₹50 lakh. SIF is designed for investors who can take higher risks than a mutual fund.