Investors will soon have another investment option apart from Mutual Funds and Portfolio Management Services. Stock market regulator SEBI has approved the launch of a new investment product or new asset class for investment which will fill the big gap for investment between mutual funds and portfolio management services. The new investment product will be for those investors who are willing to take some risk for higher returns.
Opportunity to invest in new asset class
SEBI in its board meeting has approved the launch of new investment product in the mutual fund framework under SEBI (Mutual Funds) Regulations 1996. The new investment product will be a product between mutual funds and PMS. The new investment product will provide investors with a higher risk investment option which will be better regulated and better market professionals will manage this new asset class.
Investment limit of Rs 10 lakh
Investors can start with a minimum investment of Rs 500 in Mutual Fund. While the minimum investment limit in Portfolio Management services (PMS) is Rs 50 lakh. In the new investment product or asset class, investors will have to invest at least Rs 10 lakh in an asset management company.
Investors' interests will be protected
The new investment product has been made to protect the interests of investors. For example, no leverage will be allowed in it. Apart from the permission given to mutual funds, exposure of up to 25 per cent of asset under management in derivatives for hedging and rebalancing is allowed. Apart from this, investment in unlisted companies and unrated instruments in the new asset class will not be allowed.
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