Financial Awareness Level
What Are Interval Schemes?
Interval schemes are a type of mutual fund schemes that allows investors to buy and sell shares at specific intervals rather than daily trading like traditional mutual fund scheme. These type of schemes combine features of open-ended and closed-ended schemes, offering periodic liquidity while maintaining a long-term investment structure.
Interval Schemes Meaning
An interval schemes only allows investors to redeem shares at predetermined intervals, such as quarterly, semi-annually, or annually or such other pre-determined frequency in line with SEBI Regulations. Unlike regular mutual fund schemes, which permit daily redemptions, interval funds provide limited liquidity to maintain stability and support long-term investments.
How Do Interval Schemes Work?
- Investors can buy shares anytime but can only redeem them during specific intervals.
- The fund manager invests in less liquid assets such as real estate, private equity, and debt instruments.
- The units shall be mandatorily listed.
- Allows purchase and redemption during specified transaction periods (intervals). The transaction period has to be for a minimum of 2 days and there should be at least a 15-day gap between two transaction periods. The units of interval schemes are also mandatorily listed on the stock exchanges.
Features of Interval Schemes
- Limited Liquidity – Investors can redeem shares only at fixed intervals.
- Diversified Portfolio – Includes alternative assets like real estate, private debt, and infrastructure.
- Professional Management – Actively managed to generate long-term returns.
- Better Return Potential – Invests in illiquid assets, which may yield better returns over time.
- Regulated by SEBI – Like other mutual fund schemes, interval schemes in India follow SEBI regulations.
Advantages of Interval Schemes
- Lower Volatility – Less impact from daily market fluctuations.
- Professional Fund Management – Expertly managed portfolios.
- Potential for Better Returns – Focuses on long-term capital appreciation.
Disadvantages of Interval Schemes
- Limited Liquidity – Cannot withdraw money anytime like traditional mutual funds.
- Higher Expense Ratios – Due to active management and alternative asset investments.
- Redemption Restrictions – Investors may have to wait months to access funds.
Who Should Invest in Interval Schemes?
- Investors seeking long-term capital appreciation.
- Those willing to accept lower liquidity in exchange for better returns.
- High-net-worth individuals (HNIs) and institutional investors looking for alternative asset exposure. However, you are recommended to seek advice from your financial advisor based on your risk appetite and financial goals.
Conclusion
Interval schemes offer a unique investment opportunity for those seeking exposure to alternative assets with long-term return potential. However, they come with limited liquidity, making them suitable for experienced investors with a long-term outlook.
Understanding interval schemes helps investors make informed decisions and diversify their portfolio with alternative investment opportunities.
For further details click the link:
AMFI - SEBI Categorization of Mutual Fund Schemes
SEBI Mandated Mutual Fund Classifications
Let’s Learn How to Invest in Securities Market
What is a Mutual Fund? - Beginner's Guide to Investing
FAQ Section
What is an interval mutual fund schemes?
It is a type of mutual fund scheme that allows limited redemptions at set intervals.
How often can I redeem my investment in an interval scheme?
Typically quarterly, semi-annually, or annually, depending on the scheme’s structure. (You are recommended to seek advice from financial advisor before you take any/refrain from any action)
Are interval schemes better than mutual fund schemes?
Interval funds provide better return but have lower liquidity than regular mutual fund schemes.
Who regulates interval schemes in India?
SEBI (Securities and Exchange Board of India) regulates interval schemes.
Are interval schemes risky?
They invest in illiquid assets, making them higher-risk but with potential for better returns.
How do I invest in interval schemes?
Investors can apply through mutual fund houses, brokers, or online platforms.
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Visit https://www.hdfcfund.com/information/key-know-how to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (www.sebi.gov.in/intermediaries.html). For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints directly with the AMCs. If they are not satisfied with the resolutions given by AMCs, they may raise complaint through the SCORES portal on https://scores.sebi.gov.in/scores-home/. SCORES portal facilitates investors to lodge complaint online with SEBI and subsequently view its status. In case the investor is not satisfied with the resolution of the complaints raised directly with the AMCs or through the SCORES portal, they may file any complaint on the Smart ODR on https://smartodr.in/login.
The information is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
