Due Diligence Process for SIF Empanelment

The due diligence process operates at three levels. Level 1 — Document review: Scheme Information Document (SID), Statement of Additional Information (SAI), Key Information Memorandum (KIM), and the latest annual report and audited financials. The reviewer specifically checks: (a) the strategy mandate and stated objectives — must be clear and unambiguous; (b) investment universe and instrument permissions — verify alignment with SEBI SIF framework; (c) fee structure and high-water-mark mechanics — calculate worst-case fee load on hypothetical scenarios; (d) liquidity and redemption terms; (e) tax classification expectations. Level 2 — Manager and AMC engagement: structured 60-90 minute meetings with the PM, CIO, and CRO covering strategy nuances, risk management framework, recent stress-event handling, and forward outlook. Reference checks are done with at least 3 other distributors who have empanelled the SIF, with specific questions on operational reliability, RM responsiveness, and any client-level disputes. Level 3 — Independent verification: cross-checking the manager's claimed track record against publicly available data (where applicable), reviewing any SEBI/AMFI advisory or warning history of the AMC, and assessing the AMC's solvency and ownership stability. Output of the process is a structured empanelment memo documenting the findings, the recommendation (empanel / hold / reject), and the suitability profile (which client wealth tiers and risk profiles the SIF is appropriate for). Empanelled SIFs are reviewed quarterly; any material change (PM departure, strategy drift, regulatory action) triggers an immediate review and potentially de-empanelment. Clients holding de-empanelled SIFs are notified and supported with managed exit if appropriate (factoring in tax planning and exit loads).