Ch.5 · NFO Process and Rules · hard
What is a 'Segregated Portfolio' (side pocket) in a mutual fund scheme?
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EXPLANATION
Side-pocketing (segregated portfolio) allows AMCs to separate a security facing a credit event (default, downgrade below investment grade) from the main portfolio. Existing investors receive units of both the main portfolio and the side pocket. New investors can only invest in the main portfolio. This prevents distress selling and protects long-term investors.
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