How to handle segregated portfolio (side pocket) units

Tue, 19 May 2026 00:00:00 +0000

Segregated portfolio (side pocket) is SEBI’s protective mechanism during credit events. It prevents healthy investors from being penalised by mass redemption during distress.

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Market-risk disclaimer. Mutual fund investments are subject to market risks. Past performance is not indicative of future returns. Side-pocket recovery is uncertain; partial or zero recoveries are common.

Side-pocketed scheme in debt mutual funds

Tue, 12 May 2026 00:00:00 +0000

A side-pocketed scheme (formally called a segregated portfolio) in a debt mutual fund is a regulatory mechanism under which a stressed or defaulted debt security is separated from the main portfolio into a distinct sub-portfolio, allowing the fund to quarantine the troubled asset while continuing normal operations for the remaining healthy portfolio. SEBI introduced the segregated portfolio framework through Circular SEBI/HO/IMD/DF2/CIR/P/2018/160 (dated 28 December 2018), effective immediately, in response to the IL&FS crisis that year.

Side Pocket on WebNotes

How to handle segregated portfolio (side pocket) units

Side-pocketed scheme in debt mutual funds