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SEBI's New Asset Class: Bridging Mutual Funds, PMS & AIF with ₹10L Minimum
Posted By: Blog
Could it be a mutual fund? Maybe a PMS (Portfolio Management Service) or an AIF (Alternative Investment Fund)? Not at all! This is something fresh and exciting! SEBI (Securities and Exchange Board of India) is set to launch an innovative asset class that perfectly bridges the gap between traditional mutual funds and the more exclusive offerings of PMS/AIF.
This innovative product aims to close the considerable gap in investment thresholds, providing investors with a new option in the financial market. Let’s take a closer look at what this means for investors and the features on the horizon.
Why a New Asset Class?
SEBI sees a big gap in the investment market. You can start with mutual funds for only ₹500, but to invest in PMS, you need ₹50 lakhs, and AIF requires ₹1 crore. This difference has led to the growth of unregulated schemes, which can be risky for investors. In response, SEBI is looking to create a new product that fills this gap, offering regulated investments that come with higher risks and the potential for greater returns.
Key Features of the New Asset Class
1. Managed by Mutual Fund Houses
- Likely to be available from existing mutual fund providers.
- Fund companies that manage a minimum of ₹10,000 crores or have very skilled fund managers.
2. Minimum Investment Threshold
- A minimum investment of ₹10 lakh opens the opportunity for wealthy investors.
- Designed for people who know and are ready to accept greater risks.
Check out the video link for a more in-depth understanding
Unique Investment Strategies
This new asset class will introduce innovative strategies that differ significantly from traditional mutual funds:
1. Inverse Index Products
- Goods that show little correlation with the index are created to help minimize risk in portfolios.
- Focuses on generating returns independent of market movements.
2. Long-Short Products
- Blends long-term strategies (buy low, sell high) and short-term strategies (sell high, buy low).
- These strategies, which are already used in some AIFs, are now reaching a wider audience.
3. Derivatives Exposure
- The maximum exposure to derivatives is set at 100% of the net asset value.
- Created to make careful choices while following rules.
Check out the video link for a more in-depth understanding
Who Should Invest?
This new investment option isn’t suitable for all investors. With a starting point of ₹10 lakh, it is designed for a growing segment of India’s middle and upper-middle class, who are ready to explore alternatives to standard investment strategies. These investors are interested in taking on more risk for the chance of greater returns, with SEBI overseeing the process to ensure that, despite the heightened risks, there is a solid regulatory structure in place.
Final Thoughts
The financial landscape in India is preparing for the arrival of a new asset class, a rarity in recent decades. As SEBI finalizes its plans and consults with mutual fund companies, investors should brace for exciting prospects. Whether you're a long-time investor or just beginning your journey, this new product could significantly enhance your portfolio. Watch for updates as SEBI gets ready to launch this innovative asset class!
For the complete video experience, click on this link
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