Have higher risk appetite ? There’s a new asset class option for HNIs
Source: Business Standard
SEBI(Photo: Shutterstock)
Market regulator Securities and Exchange Board of India (Sebi) has approved the introduction of a new asset class designed to cater to high-risk investors. This new asset class aims to bridge the gap between mutual funds and portfolio management services (PMS) in terms of flexibility in asset construction.
Key Features:
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Minimum Investment: Investors will need to invest a minimum of Rs 10 lakh across all investment strategies of the new product offered by a particular asset management company (AMC). -
Flexibility: The new asset class will provide investors with greater flexibility compared to traditional mutual funds in terms of asset allocation and investment strategies.
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Addressing Unregulated Schemes: Sebi aims to curb the proliferation of unregistered and unauthorized investment schemes that often promise unrealistic returns and exploit investors.
The new asset class will provide a regulated product with features like SIP (Systematic Investment Plan), higher risk-taking capability, and a higher ticket size to meet the needs of the emerging category of investors.
The offerings under the new product will be referred to as ‘Investment Strategies’, to maintain a clear distinction from the schemes offered under the traditional mutual funds.
Safeguards:
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No Leverage: The new product will not allow for leverage, limiting the risk of excessive exposure. -
Restricted Investments: Investments in unlisted and unrated instruments will be restricted to the same limits allowed for mutual funds. -
Derivatives Exposure: Derivatives exposure will be capped at 25% of the Asset Under Management (AUM) for purposes other than hedging and rebalancing.
Benefits:
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Expanded Investment Options: The new asset class will provide investors with a wider range of investment opportunities. -
Tailored Strategies: Investors can benefit from customized investment strategies that align with their risk tolerance and financial goals. -
Investor Protection: Sebi’s oversight and regulations will provide a degree of protection for investors.
First Published: Oct 01 2024 | 10:11 AM IST
