New schemes will provide investors with opportunities for better returns. More liquidity will come into the market through MF Lite and diversification in investment will increase. New products will put a stop to unauthorized investment schemes.
Stock market regulator SEBI has introduced new rules for mutual fund investors. The new changes include the framework of Specialized Investment Funds (SIF) and Mutual Fund Light. Their aim is to give new options to investors and further improve the investment market.
What is Specialized Investment Fund (SIF)?
SEBI has introduced Specialized Investment Fund for high-risk investors. Under SIF, asset management companies (AMCs) will be allowed to implement modern investment strategies. These funds will be offered for open-ended schemes and closed-ended schemes. A minimum investment of Rs 10 lakh per investor will be mandatory in these schemes. However, this rule will not apply to accredited investors. Apart from this, SEBI has said that separate branding and identity of SIF will have to be ensured from mutual fund schemes. Its purpose is to promote investor protection and transparency.
Mutual Fund Lite (MF Light)
SEBI has introduced the framework of ‘Mutual Fund Lite’ for index and exchange traded fund (ETF) schemes of mutual funds. Its objective is to simplify the investment process, encourage new players and broaden the investment market.
What are the main features
The rules have been simplified for new asset management companies (AMCs). AMCs will have to maintain a net worth of at least Rs 35 crore initially. This net worth will be reduced to Rs 25 crore for companies that make profits for 5 consecutive years. MF Lite will increase liquidity in the market and investors will get more options.
Objective of new rules
New schemes will provide investors with better return opportunities. More liquidity will come into the market through MF Lite and diversification in investment will increase. New products will put a stop to unauthorized investment schemes, which often promise impractical returns.
These changes by SEBI will reduce the gap between mutual funds and portfolio management. Investors will now have more options and they will be able to invest in schemes according to their risk appetite. This move by SEBI will increase transparency in the investment market and will help in attracting new investors.
