The Securities and Exchange Board of India (Sebi) has sought feedback on its proposal to introduce a new asset class or product category aimed at bridging the gap between mutual funds (MFs) and Portfolio Management Services (PMS).
In a consultation paper issued recently, Sebi clarified that the new asset class is intended to offer investors a regulated investment product with increased risk tolerance and larger investment thresholds. The initiative aims to mitigate the proliferation of unregistered and unauthorized investment offerings.
The current investment products range between mutual fund schemes which are retail-oriented with a low-ticket size, PMS with a ticket size of ₹50 lakh and alternative investment funds (AIFs) with a minimum investment value of ₹1 crore.
Sebi proposed a regulatory framework for the new asset class to allow for higher risk tolerance compared to mutual funds, while implementing safeguards and risk mitigation measures.
The minimum investment required for this category has been set at ₹10 lakh per investor.
Mutual funds or asset management companies (AMCs) offering this new asset class should have a minimum operational history of 3 years, with an average Assets Under Management (AUM) of ₹10,000 crore in the preceding 3 years.
What are your thoughts on this?
Here is the consultation paper - SEBI Consultation Paper
Taking a look at the paper i see finally SEBI is moving out of its conservative idealogies and views towards investing methodologies i believe (just a small ray of light for now). SEBI needs to ease it’s hold on everything that comes under there purview. They need to stop thinking every other investor other than people in key positions in SEBI are dumb and start allowing a large set of instruments easily available to every kinda investor which helps capital markets grow rather than taking it to dark ages with lot of restrictions.
They need to give a serious re-visit to US and other developed markets and take a look at the amount of affordable instruments available to every set and class of investors. ETFs pertaining to Currency, Inverse and Leveraged ETFs, Commodity based (other than gold and silver) ETFs, ETFs based on various hedging strategies, ETFs linked to cryptocurrencies and also funds are available to any person who has a dollar to invest. Rather than making every instrument available to invest a class war between rich investor and poor investor, SEBI needs to democratize every instrument going forward.
Personally i’m starting to hate SEBI and it’s personnels for making a fuss every other day and coming up with weird set of rules or proposals in the name of “protecting investors” and coming up with “froth in the market” statements every month once. They’re not protecting anyone but rather trying to restrict than educating.
Finally i just hope SEBI takes some of these consultation papers seriously and starts to come up with framework as quickly as possible and help financial market grow beyond just direct equities, bonds, commodities and MFs before it’s too late such that an entire generation of Indians miss opportunity in investing in some semi risky or high risky assets due to poor decision making ability of SEBI.