The Securities and Exchange Board of India (SEBI) has proposed the creation of a new asset class aimed at bridging the gap between Mutual Funds and Portfolio Management Services (PMS). This move is designed to offer regulated, higher-risk investment products, effectively curbing the proliferation of unauthorized schemes.
Under the new proposed guidelines, Mutual Funds with an Assets Under Management (AUM) of ₹10,000 crore over the past three years or those with experienced Chief Investment Officers (CIO) and Fund Managers will be eligible to launch this new asset. To keep retail investors away, SEBI has proposed to keep a minimum investment threshold of ₹10 lakh.
The proposed asset class will feature relaxed investment limits for debt securities, equity, and Real Estate Investment Trusts (REITs), and will be permitted to take derivative exposures beyond simple hedging and rebalancing.
SEBI has called for public comments on various aspects, including the nomenclature, eligibility criteria, and branding of this new asset class. Trustees and sponsors will be required to seek SEBI’s approval before commencing operations.
To avoid confusion with traditional Mutual Funds, SEBI has proposed distinct branding for this new asset class. Additionally, investment strategies under the new class will allow for more flexible redemption frequencies, providing investors with greater flexibility.
