Asset management companies have started working on product launches under the Securities and Exchange Board of India’s (Sebi) newly-introduced asset class of specialised investment funds (SIFs).
Some of the investment strategies underway include credit-focused strategies, sectoral rotational funds, concentrated equity portfolio schemes, long-short equity funds, high-yield debt funds, mid & small cap themes, reverse ETFs, and funds focused solely on REITs and InvITs.
While the race to be the first mover is on, fund houses are still evaluating consumer interest and demand as they await more regulatory clarity on the rules.
“We are actively evaluating potential products that align with the new specialised investment funds category…and we are not rushing to launch for the sake of being first,” said Deepak Agrawal, head of products and chief investment officer – debt at Kotak Mahindra AMC. “Our focus is on ensuring that any product we introduce is differentiated, investor-centric, and adds genuine value,” he said.
Similarly, Kartik Jain, MD & CEO at Shriram AMC said, “We are currently reviewing the solution options under this framework while closely monitoring customer demand and distributor interest. This will enable us to craft offerings that align with our investors’ financial goals and expectations.”
Fund houses are yet to get final clarity on the derivatives exposure limit within the 10% of net asset value (NAV) limit set for equities and equity-linked instruments combined, and other restrictions for investment strategies. Sebi had proposed the total exposure through derivatives of a single stock to not exceed 10% of the net assets of an investment strategy.
They also await the final eligibility criteria to launch SIFs. The proposals limit the new asset class to only mutual funds operational for a minimum of 3 years and having assets under management (AUM) worth more than Rs 10,000 crore, in the immediately preceding three years.
Alternately, the ones not qualifying can launch SIFs under a CIO with at least 10 years of fund management experience and having managed not less than Rs 5,000 crore. Additionally, a fund manager with at least 7 years of experience managing an AUM not less than Rs 3,000 crore must be appointed.
Most fund houses believe their current teams are equipped and likely eligible to manage SIFs, but do see a need to strengthen expertise internally to better manage the complex and higher-risk new asset class.
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