SEBI Proposes to Introduce ‘New Asset Class’

Current Context: The Securities and Exchange Board of India (SEBI) has proposed a new asset class aimed at bridging the gap between mutual funds (MFs) and portfolio management services (PMS).

• This new asset class is designed to cater to investors with a higher risk appetite and features a minimum investment threshold of ₹10 lakh.
• Key features of this proposed asset class include:
• Greater Flexibility: Offers more investment options and strategies compared to traditional MFs.
• Higher Risk-Taking Capability: Designed for investors willing to take on more risk for potentially higher returns.
• Systematic Plans: Options for systematic investment plans (SIP), systematic withdrawal plans (SWP), and systematic transfer plans (STP).
• Pooled Fund Structure: Similar to MF schemes but with distinct nomenclature to differentiate from existing products.
• This initiative aims to provide a regulated investment product that meets the needs of emerging investors and curbs the proliferation of unregistered and unauthorized investment products.

Question:

1 What is the minimum investment threshold for the new asset class proposed by SEBI?

• A) 5 lakh
• B) 10 lakh
• C) 15 lakh
• D) 20 lakh

Answer: B) This new asset class is designed to cater to investors with a higher risk appetite and features a minimum investment threshold of ₹10 lakh.