SEBI's New Asset Class: A Gateway for High-Risk Investors

SEBI's latest proposal introduces a new asset class targeted at high-risk profile investors, aiming to bridge the gap between mutual funds and Portfolio Management Services (PMS). This new class will offer features like SIP, a higher ticket size, and a minimum investment threshold to attract sophisticated investors while deterring retail participation.

Capital markets regulator SEBI has proposed a new asset class designed for high-risk profile investors, facilitating access to advanced strategies such as long-short equity funds and inverse ETFs.

Aiming to bridge the gap between mutual funds and Portfolio Management Services (PMS), the new asset class promises greater portfolio construction flexibility. The detailed proposal, released on Tuesday, has garnered positive feedback, including from Radhika Gupta, MD and CEO of Edelweiss Mutual Fund.

'India is opening up to diverse investment products, styles, and approaches,' Gupta said. SEBI's consultation paper highlights features like SIPs, higher risk-taking capacity, and a substantial ticket size to cater to emerging investor categories. The proposed minimum investment of Rs 10 lakh is designed to attract more affluent investors while discouraging retail participation.

This product promises opportunities that align with the growing demand for diversified investment strategies, including derivatives trading for purposes beyond mere hedging, said Kaustubh Belapurkar, Director of Manager Research at Morningstar Investment Research India.

With SEBI's new asset class, high-risk investors aiming to avoid unregulated schemes can now explore regulated opportunities, leveraging the exponential growth in managed assets over the next five to seven years, remarked Dezerv Co-Founder Sandeep Jethwani.