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ICICI Prudential Mutual Fund has filed draft documents with the Securities and Exchange Board of India (SEBI) to launch its Specialized Investment Fund (SIF) platform under the brand name iSIF, marking its formal entry into a new category of regulated investment products designed for affluent investors.

Specialized Investment Funds (SIFs) are a recent regulatory innovation introduced by SEBI to bridge the gap between traditional mutual funds and alternative investment funds. SIFs accept investments of ?10 lakh and above at PAN level and allow fund managers greater flexibility in portfolio construction.

ICICI Prudential Mutual Fund’s proposed iSIF platform will be housed within ICICI Prudential Mutual Fund, which is registered under the SEBI (Mutual Funds) Regulations, 1996. However, SEBI rules mandate a distinct brand identity to clearly differentiate the SIF business from the mutual fund business. Accordingly, ICICI Prudential Mutual Fund has adopted the “iSIF” brand with a distinct logo and product architecture, even as the strategies are offered by the same AMC.

Each SIF offering is structured as an “investment strategy” rather than a traditional scheme, with a dedicated Investment Strategy Information Document (ISID) outlining objectives, asset allocation and risks.

Among the first equity strategies filed is the iSIF Equity Ex-Top 100 Long-Short Fund, an open-ended strategy focused primarily on mid-cap and small-cap stocks, with the ability to take limited short positions through derivatives. The strategy aims for long-term capital appreciation by investing in equity and equity-related instruments of companies outside the top 100 by market capitalisation, while using derivatives selectively to manage risk or use derivatives to take bearish calls. The fund will invest 65% in midcaps and small caps, and balance can be invested in large-caps.

ICICI Prudential Mutual Fund has also filed documents for a hybrid long-short fund, which combines equity and debt exposure and allows limited short positions in both asset classes. Hybrid strategies are designed to dynamically adjust asset allocation based on market conditions.

The investment strategy shall invest 65% to 75% in equity and 25% to 35% in debt. The investment strategy can also take short exposure through unhedged derivative positions in equity and debt instruments    up to 25%. Given the unhedged exposure, the positions of equity and debt in the portfolio will vary as per the given market conditions.

Overall, SEBI permits seven investment strategies under the SIF framework — three in equity, two in debt and two in hybrid categories. Across all strategies, unhedged short exposure through derivatives is capped at 25% of net assets, ensuring leverage remains controlled.

From an investor perspective, SIFs retain several familiar mutual fund features. Subscriptions are allowed on a daily basis across all strategies. Redemption frequencies, however, vary by asset class — daily or less for equity strategies, weekly or less for debt strategies, and up to twice a week for hybrid strategies. Taxation and total expense ratio rules mirror those applicable to mutual funds, based on the underlying asset allocation.

A key safeguard in the framework is the minimum investment requirement. Investors must maintain an aggregate investment of at least ?10 lakh across all iSIF strategies at all times, although this condition does not apply to accredited investors. Switching between mutual fund schemes and SIF strategies is not permitted.

Importantly, the same fund management teams that run ICICI Prudential’s mutual funds will manage the iSIF strategies.

With the filing of these documents, ICICI Prudential Mutual Fund becomes one of the early movers in operationalising SEBI’s SIF framework, offering investors access to more sophisticated long-short and tactical strategies within a regulated mutual fund structure.

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