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Well, the regulator has named the investment option as a 'Specialised Investment Fund' and made it eligible to all investors with a minimum ticket size of Rs 10 lakh.
It has also laid down a few investing rules and regulations for this strategy. They are:
- No SIF can allocate more than 20 per cent of its net asset value (NAV) to debt instruments issued by a single issuer, which are not rated below the investment grade.
However, the 20 per cent rule doesn't apply if the strategy invests in government securities and treasury bills. This limit can also be extended to 25 per cent with prior approval from the Board of Trustees and the asset management company's Board of Directors. - Further, SIFs can't invest more than 15 per cent of the company's paid-up capital with voting rights. And neither can they invest more than 10 per cent of its NAV in equity shares of any company.
- When it comes to REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts), SIFs can invest up to 20 per cent of their total assets in these instruments but no more than 10 per cent in any single REIT or InvIT.
- SEBI has further directed asset management companies (mutual fund houses) to clearly distinguish SIFs from mutual funds through branding, advertising, disclaimer guidelines and by maintaining separate websites for the two investment options.
In other news, SEBI also introduced the Mutual Fund Lite. These new regulations are likely to encourage new entrants to enter the passive fund space.
In a board meeting this September, the regulator simplified the process for potential passive fund entrants by relaxing requirements related to net worth, track record and other relevant disclosures.
Finally, the market regulator launched a services platform known as Mutual Fund Investment Tracing and Retrieval Assistant (MITRA) for investors to trace inactive and unclaimed mutual fund folios.
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Also read: Investors with Rs 10 lakh can soon invest in new 'high risk-return' asset class
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