An SIF is a new investment product introduced by the regulator. Over the years a gap was felt between mutual funds and portfolio management schemes (PMS). PMS products have ticket size of 50 lakhs. While mutual fund can start with as low as Rs. 100 with no upper limit. SIF as a product will be between PMS and mutual fund with ticket size of 10 lakhs.
How Different Is SIF from PMS?
The minimum amount to be invested in a SIF will be ₹10 lakhs per investor. The fund house can offer a systematic investment plan (SIP) and systematic withdrawal plan (SWP) but it must comply with the minimum threshold amount. The SIF can be open-ended, close-ended, or interval-based. In comparison PMS requires ₹50 lakhs, while an alternative investment fund (AIF) has a minimum ticket size of ₹1 crore. The redemption process may include a notice period of up to 15 working days. In comparison, a MF can be redeemed in 2-3 days.
Who Can Set Up an SIF?
The regulator has outlined two routes to establish an SIF.
ROUTE -1
As per the first rule, a fund house must be in operations for a minimum of 3 years with an average asset under management (AUM) of ₹10,000 crores in the preceding three years.
ROUTE -2
Fund house must appoint a chief investment officer (CIO) for SIF with at least 10 years of experience managing an average AUM of ₹5,000 crore or more. And an additional fund manager with experience of fund management of at least 3 years and has managed an AUM of not less than 500crore.
Investment Strategies of SIF
SIF can be set up in three categories (1) Equity oriented strategy (2) Debt oriented strategy (3) Hybrid oriented strategy
Disclaimer: – Mutual funds investments are subject to market risk. Please read the offer documents carefully before investing
