The Specialised Investment Fund, introduced recently by the market regulator SEBI for sophisticated investors, is fast catching on, with 50 per cent participation from smaller cities (beyond the top 30).
Fund houses are rushing to capitalise on the first-mover advantage, as the minimum investment of Rs 10 lakh is set at the fund house level. In a way, this may be advantageous to large mutual fund houses as a person who has invested ₹10 lakh with a large fund house’s SIF can invest even ₹50,000 in subsequent offerings of the same fund house.
Madhu Nair, Chief Executive Officer, Union Mutual Fund, said that as of now, there is no clear distinction between large and small fund houses, as the SIF playfield has just opened, and no one knows who will make it big.
Rising participation from smaller cities
The SIF asset holding is also interesting, with investors from smaller cities accounting for 30 per cent, compared with 20 per cent in MF business, and this clearly shows that aspiration has no pin-codes, he said.
“SIF as a category for the industry should have an AUM of ₹1 lakh crore in next 3 years,” he added.
Fund houses see strong growth potential
Anand Vardarajan, Chief Business Officer, Tata MF, said the fund house is extremely excited about SIF because it solves problems around tax, ticket size, and talent.
“At ₹10 lakh, investors are getting a very superior product. Over the next couple of years, this category can become very big. Until now, for investments to do well, markets had to go up. In this product, you can participate 100 per cent of the time, regardless of whether the market is in a bull, bear or sideways phase,” he said.
AUM and offerings see sharp rise
In fact, the SIF AUM has more than doubled to ₹10,620 crore in March, up from ₹4,892 crore in December. The number of offerings has also doubled to 14 quarter-on-quarter as of March-end, according to the Association of Mutual Funds data.
Early movers gain ground in SIF space
SBI Mutual Fund’s Magnum SIF has taken the early lead with AUM of ₹2,994 crore against ₹1,181 crore logged in the December quarter, followed by ₹2,366 crore (₹508 crore) of early-mover Altiva SIF of Edelweiss MF and ₹1,036 crore of the latest entrant iSIF of ICICI MF.
Others who have made a mark in SIF include qSIF of quant MF (₹867 crore), Titanium SIF of Tata MF (₹404 crore) and Diviniti SIF of ITI MF (₹355 crore).
Distribution remains a challenge
Though the industry is rushing to the market, distribution has remained the weak link, with only 6,000 distributors clearing the NISM’s 150-mark test covering derivative market basics, trading strategies, risk management, and regulations.
Interestingly, there is also negative marking: 1 mark is deducted from the total score for every 4 wrong answers. The exam also includes currency derivatives, which are hardly used in SIF.
Industry seeks changes in certification norms
Besides hand-holding distributors to clear exams, the industry has been pushing SEBI to remove the negative marks and currency derivatives from the syllabus.