Bridging the Market Gap: Introduction of Specialized Investment Funds

A segmented risk based approach has been adopted by SEBI to regulate the variety of investment products which have been discovered, introduced and evolved in the investment market over the last decade or so. The current investment market features an array of product categories in order to meet the investment requirement of varying targeted investors, from retail to that of the institutional ones. This framework and norms offered these investors the required flexibility with regard to their overall investment size and portfolio, in the respective product categories from Mutual Funds to Portfolio Management Services. But over a span of time a gap was discovered between these two product categories, on the basis of the flexibility which can be offered to the investors in their portfolio building and management. To bridge such a gap SEBI proposed to introduce a new product category or asset class namely Specialized Investment Funds. This research aims to analyze in detail all the aspects surrounding such a new product category from its meaning, background, features, purpose, benefits and challenges to the legal framework surrounding it. It also analyses in detail its distinction from mutual funds as an investment product category to make its innovative importance clear to the reader. The research ends with precise suggestions and conclusion as to the future of the category and how it can be kept relevant over the years to follow.