Sebi Standardizes Application And Disclosure For Specialized Investment Funds

On April 11, the Securities and Exchange Board of India (Sebi) came out with a circular to streamline the application process and also to standardize the disclosure requirements for Specialized Investment Funds (SIF). Earlier circulars regarding the same had come out on February 27 and April 9. The aim is to bring uniformity and facilitate efficient processing of applications from mutual funds that wish to launch specialised investment strategies. 

The foundation of this directive can be traced to Regulation 49Y(1) of the Sebi (Mutual Funds) Regulations 1996. This regulation stipulates that the launch of investment strategies by mutual funds must stick to procedures that apply to the given schemes as stated in Regulation 28 of these regulations. The recent circular built on this and established a regulatory framework for such funds. It includes the eligibility criteria that mutual funds that seek to establish SIFs should have, plus outlines the disclosure requirements in the  Investment Strategy Information Document (ISID). 

Sebi has now mandated a specific format for the above. The standardised format is provided in Annexure A of the circular. The standardised format will now mean that investors receive information that is consistent across different SIFs and thus can make informed decisions with regard to investing. 

The circular will be effective from the date of issuance. This circular aims to safeguard the interests of investors and help in the development and regulation of the securities market. The circular is available on Sebi’s official website under the "Legal -> Circulars" section. 

Specialized Investment Funds (SIFs) in India offer sophisticated investors flexible strategies beyond traditional mutual funds, with a Rs 10 lakh minimum investment. Regulated by Sebi, they bridge the gap with Portfolio Management Services. Equity-oriented SIFs can employ long-short strategies, focusing on specific market segments or sectors. Debt-oriented SIFs offer flexibility in fixed-income with potential short positions. These funds cater to experienced investors seeking potentially higher returns through specialized approaches, subject to regulatory guidelines and AMC eligibility criteria based on track record or experienced personnel.