Page 30 - Banking Finance April 2025

ARTICLE

also not invest more than 25% of its NAV in the debt Benchmarking
and money market securities of a specific sector.
SIF will have single-tier benchmark structure for its
investment strategies. Equity oriented investment strategies
SIFs will have multiple investment strategies in equity, debt
is compared to a broad representative market index (e.g.
and hybrid asset classes.
BSE Sensex or NSE Nifty or BSE 100 or CRISIL 500 etc.), and
debt oriented investment strategies is compared with a
Equity-oriented investment strategies: Equity long-short
broad representative index which is representative of the
fund; equity ex-top 100 long-short funds; sector rotation
funds portfolio. In contrast, hybrid investment strategies are
long-short fund.
compared with the suitable broad representative benchmark
Equity Long-Short Fund: Minimum allocation to equity
wherever available.
and equity-related instruments will be at least 80%, and
maximum short exposure (un-hedged derivative
positions) in equity and equity-related instruments will Branding and Marketing
not be more than 25%. To distinguish SIFs from mutual funds, SEBI requires AMCs
Equity Ex-Top 100 Long-Short Fund: Minimum to have a separate branding for their SIF schemes. For a full
investment in equity and equity-related instruments of five years, they can use the sponsor's brand name, but it
stocks other than top 100 by market capitalisation will has to be in conjunction with phrases like "brought to you
be 65%, and maximum short exposure through by" or "offered by" to keep things clear. Moreover, SIFs
unhedged derivative positions in equity and equity- should have their own dedicated website or webpage so that
related instruments of other than large-cap stocks will no confusion is caused with the general mutual fund
be 25%. schemes, and AMCs will have to ensure that a SIF has its
Sector Rotation Long-Short Fund: 80% minimum own brand name and logo, separate from that of its general
investment in equity and equity-related instruments of mutual fund. The SIF's brand name in promotional materials
equal to or up to 4 sectors involved and 25% maximum must be equal to or larger than the mutual fund brand
short exposure through unhedged derivative positions name.
in equity and equity-related instruments.
Risk Management
Debt-based investment strategies: Debt long-short fund
Risk has been classified into 5 levels (Risk Band 1 to 5) and
and sectoral debt long-short fund.
reviewed on a monthly basis. SIFs may hold up to 25% of
Hybrid investment strategies: Hybrid long-short fund and their net assets in exchange-traded derivative instruments
hybrid long-short fund for non-hedging purposes, with exposure calculations on the
basis for mutual fund treatment. Cumulative gross
To avoid over-proliferation of funds, SEBI has capped the exposures across both cash and derivative markets cannot
number of AMCs to one investment strategy for each exceed 100% of net assets.
category- SUBSCRIPTION, REDEMPTION AND LISTING

Join
SIFs can be an open-ended, close-ended, or interval fund
strategies. SIF will not impose limits on investment strategy Online Certificate Course on
subscription and redemption intervals and will bestow
strategic selection intervals based on investment nature.
Note that an investment strategy's subscription frequency Reinsurance
and redemption frequency are not each other's opposites.
The notice period for redemptions can go up to 15 working For details please visit
days. Closed-ended and interval funds must be exchanged
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in stock exchanges.

BANKING FINANCE | APRIL | 2025 | 27