Axis Mutual Fund Set to Launch First Specialized Investment Fund in Two Months

Axis Mutual Fund, an early mover in the potential Specialized Investment Fund (SIF) space, is gearing up to launch its inaugural fund in this category within the next two months. This announcement signals renewed momentum for Axis MF's SIF plans, following a period where they had trailed some peers in product rollout. The Securities and Exchange Board of India (SEBI) introduced SIFs in February 2024 as a product designed to cater to investors seeking higher risk and returns than traditional mutual funds but with a lower entry barrier than Portfolio Management Services (PMS). Axis MF appointed Nandik Mallik in March to head its equity and hybrid SIF division and is anticipated to receive the necessary SEBI license by the end of November.

Nandik Mallik stated that the fund house will concentrate on existing market categories, with arbitrage funds being the most immediate opportunity. These funds are expected to attract corporations and family offices initially. As SIFs establish a credible track record, high-net-worth individuals (HNIs) and other corporates are likely to increase their participation.

The minimum investment for a SIF is ₹10 lakh, substantially lower than the ₹50 lakh required for PMS. Several other fund houses are already active in the SIF segment, with SBI Mutual Fund, Edelweiss Mutual Fund, and Quant Mutual Fund having recently closed their New Fund Offers (NFOs) in this category. Nippon Mutual Fund has applied for a license, and Mirae Asset Investment Managers has announced brand names for their SIFs.

Impact: This development is significant for the Indian mutual fund industry as it introduces a new product category that can attract a different segment of investors. It is expected to increase product diversity, foster competition among fund houses, and provide more options for investors willing to take on moderate to higher risks. The successful launch by Axis Mutual Fund could pave the way for further innovation and growth in the SIF space. Rating: 7/10.

Heading Difficult terms: Specialized Investment Fund (SIF): A type of investment fund regulated by SEBI, designed for investors willing to take on higher risks than traditional mutual funds, with a minimum investment threshold higher than mutual funds but lower than PMS. Portfolio Management Services (PMS): A service offered by professional managers who manage investment portfolios for high-net-worth individuals and institutions, typically with a higher minimum investment amount than mutual funds. Arbitrage funds: A type of mutual fund that aims to generate profits by exploiting price differences between the cash and futures markets or between different exchanges. Securities and Exchange Board of India (Sebi): The statutory body responsible for regulating the securities market and mutual funds in India. New Fund Offer (NFO): The period during which a mutual fund company offers units of a newly launched fund to the public for the first time. High-net-worth individuals (HNIs): Individuals with substantial liquid financial assets, typically defined as above a certain threshold (e.g., ₹1 crore or more excluding primary residence).