Smaller mutual fund houses have asked the capital markets regulator Securities & Exchange Board of India (Sebi) to consider changing the Specialized Investment Fund (SIF) entry route framework in order to help them enter this market.
This was among the various discussions that took place with CEOs of mutual fund houses in their first meeting with the Sebi chairman Tuhin Kanta Pandey on Monday.
How can an AMC establish a SIF?
The current framework has two routes for an AMC to establish a SIF. The first is a sound track record which requires that a mutual fund has been in operation for a minimum period of 3 years and has an average asset under management (‘AUM’) of not less than Rs 10,000 crores, in immediately preceding 3 years.
The alternate route is that it has appointed a Chief Investment Officer (‘CIO’) for the SIF with an experience of fund management of at least 10 years and has managed an average AUM of not less than Rs 5,000 crores, along with an additional fund manager for the SIF with experience of fund management of at least 3 years and has managed an average AUM of not less than Rs 500 crores.
What do industry players say?
Industry players believe that these requirements favour large mutual fund houses as they already have eligible fund managers and it is very difficult to poach from them. Some of the large fund houses are also finding it difficult to find fund managers that fit in the regulatory eligibility and have the right talent for this product. In addition, they also highlighted that the framework is biased as they also have the same mutual fund license as large players that allows them to pool money from investors and manage it under regulated schemes.
“A late entry will be a big disadvantage in terms of market share,” an executive said and added that since this is for sophisticated investors and the regulator has already set a minimum investment threshold of Rs 10 lakh, it should be left to investors to decide which mutual fund to invest in.
The net assets under management of this segment as of October 2025 was Rs 2,010.44 crores and the total number of folios stood at 10,212, with net inflows of Rs 2,004.56 in Oct 2025.
Another item discussed in the meeting was the proposed changes to the total expense ratio and brokerage charged by AMCs in consultation paper released by Sebi October. The regulator has asked the industry body AMFI for data which shows how much mutual funds actually spend on transactions.