The Securities & Exchange Board of India (SEBI) has allowed mutual funds to launch a Specialised Investment Fund (SIF) under which they are permitted to launch long-short funds across categories for wealthier investors effective April 1.
These have only been allowed to mutual funds who have been operating for a minimum of three years and its average asset under management (AUM) of not less than Rs 10,000 crore, in immediately preceding 3 years.
The regulator also requires that no action has been taken against the asset management company in the last three years. Alternatively, the eligibility extends to SIF Chief Investment Officers (CIOs) with over 10 years of experience and minimum AUM of Rs 5,000 crore and an additional fund manager with 3 years of experience and minimum AUM of Rs 500 crore has been appointed.
A SEBI circular said that this has been done to bridge the gap between mutual funds and PMS in terms of portfolio flexibility.
Under equity, the regulator has allowed various strategies to be launched under SIF including Equity Long-Short Fund, Equity Ex-Top 100 Long-Short Fund, and Sector Rotation Long-Short Fund.
Debt Long-Short Fund and Sectoral Debt Long-Short Fund can also be offered by SIFs along with hybrid investment strategies.
The minimum threshold of investment is Rs 10 lakh and the circular said it shall apply exclusively to investments under SIFs and not include investments made by the investor in regular MF schemes of the same AMC.
In addition, the AMC may offer systematic investment options such as Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) for investment strategies launched under the SIFs.
In the latest circular the regulator has also listed rules for disclosures, advertising, distribution, and breach of minimum investment scenario among others.
SEBI has given March 31 as deadline to Association of Mutual Funds in India (AMFI) to come up with guidelines and standards as required under this circular.
