SEBI Proposes New High-Risk Asset Class to Attract Sophisticated Investors

The Securities and Exchange Board of India (SEBI) has proposed a new asset class for high-risk-profile investors to bridge the gap between mutual funds and portfolio management services. The new class requires a minimum investment of Rs 10 lakh and offers higher flexibility and risk-taking capabilities, aiming to capitalize on India's growing managed asset sector.

On Tuesday, the Securities and Exchange Board of India (SEBI) proposed a groundbreaking new asset class tailored for high-risk-profile investors. This new category aims to bridge the gap between mutual funds and portfolio management services (PMS), with a minimum investment requirement of Rs 10 lakh.

According to SEBI's consultation paper, this innovative asset class can invest in derivatives beyond mere hedging and rebalancing. The product promises greater flexibility, heightened risk-taking capability, and a higher ticket size to cater to emerging investors. 'While such relaxations may enhance the risks associated with the product, the same can be mitigated by putting a higher limit on minimum investment size,' SEBI stated.

Market experts view this development as a potential game-changer. Sandeep Jethwani, Co-Founder of Dezerv, highlighted that high-risk profile investors now have access to regulated opportunities without high minimum thresholds. Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, emphasized India's openness to diverse investment products and approaches. SEBI has invited public comments on these proposals until August 6.

(With inputs from agencies.)