This is part 5 (the last) of our SEBI regulations series. It covers the products that pool investors’ money: mutual funds, SIFs, AIFs, PMS, REITs and InvITs. They are popular in SEBI Grade A, RBI Grade B finance and NISM-type questions.
The big picture
Product
Minimum investment (approx)
Who it is for
Regulations
Mutual fund
₹100–500 (SIP)
Everyone
MF Regulations, 1996
Specialised Investment Fund (SIF)
₹10 lakh
Richer investors wanting advanced strategies
MF Regulations (framework of 2025)
PMS (Portfolio Management Services)
₹50 lakh
HNIs
New PMS Regulations, 2026 (replacing 2020)
AIF (Alternative Investment Fund)
₹1 crore
HNIs and institutions
AIF Regulations, 2012
REIT
One lot (₹10,000–15,000)
Everyone (listed)
REIT Regulations, 2014
InvIT
One lot (₹10,000–15,000)
Everyone (listed)
InvIT Regulations, 2014
Mutual funds
Structure (three tiers)
Entity
Role
Sponsor
Sets up the fund (like a promoter)
Trustees
Protect unitholders’ interests; hold the property in trust
Asset Management Company (AMC)
Manages the money; net worth of at least ₹50 crore (approx)
Custodian
Keeps the securities safe
RTA
Registrar and Transfer Agent (e.g., CAMS, KFintech)
Key facts
Fact
Detail
First mutual fund
UTI, set up in 1963 under the UTI Act (first scheme: US-64)
Total Expense Ratio; capped by SEBI (highest for small equity schemes, approx 2.25%)
NFO
New Fund Offer: open for up to 15 days
MF Lite
Lighter rules for passive (index/ETF) funds, from 2024–25
AUM
Indian MF industry is well above ₹70 lakh crore (approx, 2026)
Specialised Investment Funds (SIF)
New product category introduced in 2025, between mutual funds and PMS.
Run by eligible mutual fund AMCs; minimum investment ₹10 lakh per investor (across SIF strategies of an AMC).
Can use strategies like long-short equity, with limited derivatives exposure.
Portfolio Management Services (PMS)
A portfolio manager manages a client’s money in the client’s own name (individual portfolio, not pooled).
Minimum investment: ₹50 lakh.
Types: discretionary, non-discretionary and advisory.
New PMS Regulations, 2026 (approved September 2026): a PRIM route for investing in mutual fund units with a ₹25 lakh minimum, an Independent Fund Manager concept, and permission to invest in IPOs, primary debt and up to 10% in unlisted debt (with consent).
Alternative Investment Funds (AIFs)
Category
Invests in
Examples
Category I
Areas the government wants to encourage
Venture capital, angel funds, SME funds, social impact funds, infrastructure funds
Category II
Everything not in I or III; no leverage except for day-to-day needs
Private equity, debt funds, real estate funds
Category III
Complex trading strategies; leverage allowed
Hedge funds, PIPE funds
Rule
Detail
Minimum investment
₹1 crore (₹25 lakh for employees/directors of the manager)
Minimum corpus of a scheme
₹20 crore (lower for angel funds)
Maximum investors per scheme
1,000 (angel funds: up to 200)
Manager’s own stake
At least 2.5% of the corpus or ₹5 crore, whichever is lower (Cat I and II; 5% / ₹10 crore for Cat III)
Accredited investors (2026 framework)
An accredited investor can access products with lower minimum ticket sizes (e.g., large-value funds).
From November 2026: AIF managers, AMCs offering SIFs and PMS providers can accredit investors directly; new securities-exposure test of ₹5 crore (individuals) or ₹20 crore (body corporates); non-residents including FPIs are deemed accredited; accreditation is valid for 3 years.
REITs and InvITs
Point
REIT
InvIT
Invests in
Rent-earning real estate (offices, malls, warehouses)
Infrastructure (roads, power lines, pipelines, towers)
First in India
Embassy Office Parks REIT (2019)
IRB InvIT (2017)
Asset rule
At least 80% in completed, revenue-generating assets
At least 80% in completed, revenue-generating projects (for public InvITs)
Distribution
At least 90% of net distributable cash flows to unitholders
SM REITs (Small and Medium REITs, 2024): assets of ₹50–500 crore
–
2026 changes: SEBI allowed depository receipts on REIT and InvIT units (to be listed first in GIFT IFSC; REIT DR circular of 2 November 2026) and eased unitholder approval to 75% of votes cast.
Exam-ready one-liners
UTI (1963) was India’s first mutual fund; Kothari Pioneer (1993) the first private one.
Mutual funds have a sponsor, trustees and an AMC.
ELSS has a 3-year lock-in; the riskometer has 6 levels.
