AIFs and wealth managers flock to mutual fund licences amid SEBI’s SIF push

India’s mutual fund industry is set for expansion, with a growing number of firms from the alternative investment and wealth management sectors exploring entry into the space. While the industry currently comprises 46 asset management companies, several new players are awaiting regulatory approval.

According to the market regulator’s website, as on March 31, 2025, the granting of in-principle approval for five entities is pending which includes AlphaGrep Securities Private Limited, Monarch Networth Capital Limited, Marcellus Investment Managers Private Limited, Wealth First Portfolio Managers Limited, and Nuvama Wealth Management Limited.

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Out of these five, AlphaGrep Securities Private Limited on Monday announced that it has received the in-principle approval from Sebi to sponsor mutual fund business.

This move follows licence grants to Jio Financial Services Ltd. and Blackrock Financial Management Inc, Pantomath Capital Advisors Private Limited, and Capitalmind Financial Services Private Limited but the approval for final registration is under consideration.

Last month, JioBlackRock announced receiving the in-principle approval to commence mutual fund business and it has already filed draft documents with Sebi to launch three debt mutual funds.

Post SEBI’s introduction of specialised investment funds (SIFs), the shift in regulatory and tax treatment between traditional AIFs and mutual funds has prompted firms to diversify their offerings.

SIFs, which require a minimum investment threshold of Rs 10 lakh, pose an existential threat to Category III AIFs and portfolio management services (PMS), which typically require Rs 50 lakh and Rs 1 crore respectively.

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Moreover, mutual funds benefit from more advantageous tax treatment—long-term capital gains are taxed at 12.5%, whereas gains in AIFs are taxed at 30% for resident investors and 39% for non-residents

The licensing trend mirrors a decade-old shift when PMS providers like Parag Parikh Financial Advisory Services transitioned to mutual funds—successfully converting PMS clients into mutual fund investors.

In addition, AMCs like Mirae Asset, ITI, Edelweiss Asset Management have launched their new brand identity for SIF. Quant Mutual Fund in its monthly release announced that it was the first recipient of SEBI license for SIF.

Quant Mutual Fund informed its investor base of nearly 95 lacs folios that the fund house was the first recipient of SEBI license for the Specialized Investment Fund (SIF) – the Long-Short fund in equity, debt and hybrid categories and this product category is suitable for sophisticated investors who are well-versed with financial markets and possess a relatively high-risk appetite and seeking more evolved investment strategies, the monthly release said.

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