Side-pocketed scheme

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

A side-pocketed scheme is a mutual fund scheme that has invoked SEBI’s side-pocketing framework to isolate stressed credit assets from the main portfolio into a separate segregated portfolio . The side-pocket mechanism protects performing-portfolio investors from credit deterioration in specific holdings.

How it works

Trigger

When an underlying credit asset faces material deterioration (default, severe downgrade), the AMC may:

Mark down the stressed asset.
Apply for segregated-portfolio creation.
Obtain trustee and SEBI approval.

Outcome

Post side-pocketing:

Side-Pocketed-Scheme on WebNotes

Side-pocketed scheme

How it works

Trigger

Outcome