SEBI Plans to Introduce Intermediate Asset Class Amid Mutual Funds and PMS

• ByStartupStory     |    December 8, 2023

Sebi, the Securities and Exchange Board of India, is exploring the creation of an intermediate asset class catering to high-risk investors, positioned between portfolio management services (PMS) and mutual funds. Madhabi Puri Buch, Sebi’s chairperson, mentioned ongoing discussions with industry stakeholders to shape this new asset class, emphasizing the need to define its structure, benefits, and risk management for investors.

The proposed category is expected to require a higher minimum investment and feature relaxed norms to potentially yield higher returns. In October, Sebi reached out to the Association of Mutual Funds in India (AMFI) seeking the viewpoints of individual asset management companies (AMCs) on this new mutual fund category, as reported by Mint.

Additionally, Buch highlighted Sebi’s efforts towards achieving same-day settlement of trades by March 2024, with plans for an optional parallel system for instant settlement. The move to ‘T+0’ settlement, where trades are settled on the same day, is on the horizon, providing greater efficiency in India’s settlement process.

Notably, India aims to be the second country after China to adopt a one-day settlement cycle, contrasting with most major economies that settle trades within two days. Buch stressed Sebi’s engagement with various investors, particularly foreign investors like pension funds, to facilitate easier investments in REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts), highlighting their potential for providing inflation-proof income.

Sebi recently greenlit a framework for supporting small and medium REITs, positioning these investment vehicles as entities owning, operating, or financing income-generating real estate. Additionally, Buch emphasized the nature of InvITs as investment instruments akin to mutual funds, allowing direct investment in the infrastructure sector.

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