Sebi mulls new asset class to fill gap between mutual fund, PMS
Mutual funds may soon get to offer investment products that have been accessible mostly to rich investors with bigger amounts to invest. The Securities and Exchange Board of India (Sebi) has proposed to introduce a new asset class for investors, who want to put between Rs10 lakh and Rs50 lakh in differentiated investment strategies such as Long-short equity and Inverse Exchange Traded Funds, among others.
Investors can invest a minimum of Rs 10 lakhs in such products, below the threshold of Rs 50 lakh for portfolio management service (PMS) and Rs 1 crore for alternative investment funds (AIFs). The minimum investment size of mutual funds is as low as Rs 500 and there is no cap. Several affluent investors put money in PMS and AIFs for more focused and unique investment strategies.
“…the proposed New Asset Class intends to fill the gap between MFs and PMS by offering a regulated product featuring greater flexibility, higher risk-taking capability and a higher ticket size, to meet the needs of the emerging category of investors,” said Sebi in a discussion paper on Tuesday. “The absence of such an investment product appears to have inadvertently propelled the investors of this segment towards unregistered and unauthorized investment schemes/entities,
The new asset class would provide a regulated and structured, while having a distinct nomenclature that will distinguish it from traditional mutual funds and other investment products
“It opens up an array of possibilities to launch new age themes like EV, Water,
