SEBI introduces system to monitor minimum investment threshold under SIF
The investor would be given a 30-day notice to rebalance the investments to comply with the norms
The Securities and Exchange Board of India (SEBI) has introduced a mechanism for monitoring compliance with the minimum investment threshold (MIT) under Specialized Investment Funds (SIF).
Thus, in case of any breach of the threshold of Rs.10 lakh by an investor, including through transactions on stock exchanges or off-market transfers, all units across investment strategies of the concerned SIF would be frozen for debit.
The investor would be given a 30-day notice to rebalance the investments to comply with the threshold.
The circular of the market regulator read, “In case an investor rebalances his/her investments in SIF within the notice period of 30 days, the units shall be unfreezed, and no further action shall be taken with regard to compliance.” This means that the frozen units will be automatically redeemed by the Asset Management Company (AMC) at the applicable Net Asset Value (NAV).
SIFs allow mutual funds to launch advanced investment strategies as open-ended, closed-ended and interval structures, adding depth and variety to the investment landscape.
The ‘active breach’ would mean a fall in the aggregate value of an investor’s total investment across all investment strategies of SIF, below the threshold of Rs.10 lakh, on account of any transaction, redemption, transfer, or sale.