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nism-series-va-specialized-investment-funds-threshold[ MUTUAL FUND DISTRIBUTORS ]

What is the minimum investment amount mandated by SEBI for an investor participating in Specialized Investment Funds (SIF), and what is the maximum permissible unhedged short exposure through derivatives?

[ A ]Minimum investment of Rs. 50,000 per strategy, with maximum unhedged short derivative exposure of 50% of NAV

[ B ]Minimum investment of Rs. 1 crore across strategies, with unlimited unhedged short derivative exposure

[ C ]Minimum investment of Rs. 10 lakhs across strategies of the AMC, with maximum unhedged short derivative exposure of 25% of NAV[ CORRECT ]

[ D ]Minimum investment of Rs. 500 per month via SIP, with no derivative exposure permitted under any strategy

Takeaway

Option C is correct: Minimum investment of Rs. 10 lakhs across strategies of the AMC, with maximum unhedged short derivative exposure of 25% of NAV

Derivation

Specialized Investment Funds (SIFs) were introduced by SEBI to bridge the product gap between mutual funds and PMS/AIFs. SIFs require a minimum aggregate investment of Rs. 10 lakhs from an investor across all investment strategies of the same AMC. Under permitted strategies (like Equity Long-Short or Sector Rotation), the maximum short exposure through unhedged derivative positions is restricted to 25% of NAV. This question tests critical regulatory parameters for SIFs. The common mistake is confusing the SIF threshold of Rs. 10 lakhs with the PMS threshold (Rs. 50 lakhs) or retail mutual funds.

Why the others fail

A — Minimum investment of Rs. 50,000 per strategy, with maximum unhedged short derivative exposure of 50% of NAV

Rs. 50,000 is a retail threshold; SIFs mandate a minimum Rs. 10 lakh commitment and cap short exposure at 25%, not 50%.

B — Minimum investment of Rs. 1 crore across strategies, with unlimited unhedged short derivative exposure

Rs. 1 crore is the minimum ticket size for Category I and II AIFs, and derivative short exposure in SIFs is strictly capped at 25%.

D — Minimum investment of Rs. 500 per month via SIP, with no derivative exposure permitted under any strategy

Rs. 500 SIPs apply to standard retail mutual funds, whereas SIFs cater to high-ticket sophisticated investors with derivative strategies.