SEBI has just issued guidelines for Specialized Investment Funds (SIF).
The salient features are as follows:
1. Each AMC can launch a total of 7 SIFs -3 equity (1 Large Cap, 1 Non Large Cap, 1 Sectoral) 2 debt and 2 Hybrid (The AMC needs 3 years existence or have two Fund Manager with 10 yrs and 5 yrs experience managing atleast 5,000 cr).
2. Distributors need to pass NISM Series XIII Common Derivatives Certification Examination
3. These are high risk - high reward schemes, hence
5. Rs 10 lac minimum investment (total across all SIFs of an AMC). Unless the investor is an Accredited Investor. Note : you cannot club your MF and SIF investments for this purpose.
6. where is the risk compared to normal MFs?
A. Derivative Exposure risk: All SIFs are Long-Short funds with up to 25% unhedged derivative portfolio
B. Concentration Risk : focussed portfolios
C.Liquidity Risk: May not allow daily redemptions - could be anywhere from daily to weekly, fortnightly etc including only on maturity.
D. Risk of Inability to average out your exposure on market corrections-AMC can specify subscription periods as daily , weekly, fortnightly or not at all!!
However once 10 lac is invested the SIF may allow SIPs, STPs and SWPs - at the discretion of the AMC.
Sunil Subramaniam Ex MD Sundaram mutual
