MF Lite has been introduced as a new initiative by the Securities and Exchange Board of India (SEBI). It provides opportunities for high-risk investors and new fund houses, making investing in mutual funds easy and flexible. The scheme was notified on 16 December 2024 under the SEBI (Mutual Funds) (Third Amendment) Regulations 2024.
What is MF Lite?
MF Lite is a special model of mutual fund investment through Specialized Investment Funds (SIFs), targeted at investors who are willing to take higher risks.
Main rules of MF Lite
Minimum Investment Amount: It will be mandatory for any investor to invest at least ₹ 10 lakh in Specialized Investment Funds (SIFs). Accredited investors are exempted from this rule. Fund Manager Qualification: Fund managers of SIFs are required to hold NISM certificate as prescribed by SEBI. All provisions applicable: General mutual fund rules will apply to SIFs, unless specifically stated otherwise by SEBI.
SEBI’s objective through MF Lite
Incentives to new players: Simplifying the requirements of net worth, experience and profitability required for entry into the mutual fund space. To provide opportunities for setting up new fund houses. Simplifying processes: Speeding up approval processes and reducing disclosures for investment schemes. Simplifying rules for passive schemes such as index funds and ETFs. Promoting risk and innovation: Providing opportunities for high-risk investors to invest in diversified strategies.
Why is MF Lite important?
Current mutual fund regulations are complex: entry rules for small fund houses and new players are stringent. MF Lite will encourage new players by simplifying these obstacles. Investors will get more choices: Different from traditional mutual fund schemes, Specialized Investment Funds will offer new and diverse strategies. Opportunity for small fund houses: MF Lite will give an opportunity to small fund houses to establish themselves in the market through low expenses and simple processes.
Benefits of MF Lite
Feature Benefits Minimum investment Better opportunities for investors with higher risk appetite. Simple rules Less monitoring and easy process for new fund houses. Diversity for investors Opportunity to invest in diversified high risk schemes. Low expenses Cost effective for small fund houses and passive schemes. Faster Approval Process Quick approval for fund launches and investment strategies.
