Securities and Exchange Board of India (SEBI) has introduced a regulatory framework for Specialized Investment Funds (SIF) through amendments to the SEBI (Mutual Funds) Regulations, 1996. This initiative addresses the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS) in terms of portfolio flexibility. SIF aims to provide an alternative investment vehicle for investors seeking a product with characteristics bridging these two options. The framework aligns with SEBI’s segmented, risk-based regulatory approach, tailoring norms to investment size, investor profile, and product complexity. The guidelines, detailed in Annexure A of the circular, will take effect from April 1, 2025. By March 31, 2025, the Association of Mutual Funds in India (AMFI) will issue necessary guidelines and standards for SIF. Additionally, stock exchanges, clearing corporations, and depositories are instructed to prepare systems, amend relevant regulations, and ensure wide dissemination of the framework among market participants. This circular is issued under Section 11(1) of the SEBI Act, 1992, to safeguard investor interests and promote a well-regulated securities market. The notification is available on SEBI’s website.
Securities and Exchange Board of India
Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 Dated: February 27, 2025
To,
All Mutual Funds
All Asset Management Companies (AMCs)
All Trustee Companies/ Board of Trustees of Mutual Funds
All Registrar and Share Transfer Agents (RTAs)
All Recognized Stock Exchanges
All Recognized Clearing Corporations
All Depositories
Association of Mutual Funds in India (AMFI)
Madam/ Sir,
Subject: Regulatory framework for Specialized Investment Funds (‘SIF’)
1. The landscape of investment management in India has significantly evolved over the years, marked by the introduction and development of various investment products. SEBI has adopted a segmented risk-based approach to regulation of these products depending on their complexity, sophistication of target investors, minimum investment size etc.
2. The current range of investment products with varying risk-reward profiles, are intended to meet the investment needs of retail, high net-worth and institutional investors. The regulatory framework and prudential norms governing these investment vehicles become progressively more flexible from Mutual Funds (‘MFs’) to Portfolio Management Services (‘PMS’) to Alternative Investment Funds (‘AIFs’), in sync with the investment profile and investment size of these products.
3. Over the years, a gap has emerged between MFs and PMS in terms of portfolio flexibility, creating an opportunity for a new investment product. To bridge this gap, the SEBI (Mutual Funds) Regulations, 1996 have been amended to introduce the broad regulatory framework for the new investment product – Specialized Investment Fund (SIF). The amendment notification is available at link.
4. The comprehensive regulatory framework for the Specialized Investment Fund is provided in Annexure A to this circular.
5. This circular shall come into force with effect from April 01, 2025.
6. AMFI shall issue necessary guidelines/standards as required under this circular by March 31, 2025.
7. The Stock Exchanges, Clearing Corporations and Depositories are directed to:
7.1. take necessary steps and put in place necessary systems for the implementation of this circular;
7.2. make necessary amendments to the relevant bye-laws, rules and regulations, wherever applicable, for the implementation of this circular;
7.3. bring the provisions of this circular to the notice of market participants and also disseminate the same on their website.
8. This circular is issued in exercise of the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Chapter VI-C of the SEBI (Mutual Funds) Regulations 1996 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
9. This circular is available atsebi.gov.in under the link “Legal ->Circulars”.
Yours faithfully,
Peter Mardi
Deputy General Manager
Investment Management Department
+91-22-26449233
peterm@sebi.gov.in
