Key facts
- India's Securities and Exchange Board of India (SEBI) is proposing to allow portfolio managers to take unhedged equity derivatives positions.
- Specialized Investment Funds (SIFs) are a new investment product introduced by SEBI, effective December 16, 2024.
- SIFs are designed to offer more flexible investment strategies than traditional mutual funds and bridge the gap with Portfolio Management Services (PMS).
- SIFs can invest in various asset classes including equity, debt, derivatives, REITs, InvITs, and commodity derivatives.
- SIFs will be permitted to take unhedged short exposure through derivatives, up to 25% of their net assets.
- The minimum investment for SIFs is ₹10 lakh per investor (at PAN level), excluding accredited investors.
India's Securities and Exchange Board of India (SEBI) is proposing to allow portfolio managers to take unhedged equity derivatives positions, a move aimed at boosting market liquidity and expanding investment options. This is part of a broader regulatory easing that includes the introduction of Specialized Investment Funds (SIFs), effective December 16, 2024.
SIFs are designed to bridge the gap between traditional mutual funds and more flexible Portfolio Management Services (PMS). They will permit investment across various asset classes, including derivatives, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and commodity derivatives. A key feature is the allowance for SIFs to take unhedged short exposure through derivatives, capped at 25% of their net assets.
The minimum investment for SIFs is ₹10 lakh per investor (at PAN level), though accredited investors are exempt. To establish a SIF, Asset Management Companies (AMCs) must meet specific criteria, either through a sound track record of at least three years with an average AUM of ₹10,000 crore, or by appointing a Chief Investment Officer (CIO) with 10 years of fund management experience managing at least ₹5,000 crore AUM.
Additionally, SEBI may allow portfolio managers to invest clients' money overseas under the Liberalised Remittance Scheme and in IPO-bound firms.