New Investment Asset Class ‘Investment Strategies’ Coming

This new investment class is for HNIs only – i.e. people with a minimum of 10 lakh to invest.

I read a lot of websites but the whole picture is not clear.

I have understood that there will be certain rules for investing in derivatives, and it will fall between mutual funds and portfolio management services.

I fail to understand why this was necessary when there are thousands of mutual funds and many portfolio management services already available.

When the whole picture becomes clear I will write a detailed post. Till then if you have 10 lakh to invest I would request you not to invest in this new asset class now. It takes time to understand a new investment opportunity, how it works, what are the risks and rewards etc.

Invest only when you fully understand this or any other new asset class.

Here are a few features of this new investment class:

A. The minimum investment limit for these schemes will be ₹10 lakh per investor across all strategies.

B. This asset class will fall somewhere between mutual funds and PMS (Portfolio Management Services).

C. These will have adequate safeguards such as no leverage, and no investment in unlisted and unrated instruments beyond what is permissible for mutual funds. Exposure to derivatives is limited to 25% of AUM for purposes other than hedging and rebalancing.

D. These offerings will be referred to as ‘investment strategies’ to keep them separate from the traditional instruments of mutual funds.

Let us wait for the advertisements from the mutual funds, then we will understand this new investment scheme better.

I suggest just keep investing in good stocks, and mutual funds and trade derivatives with hedge to be safe. You can do my paid course to learn some good options and futures hedging strategies.