All money market and debt securities, including floating rate securities, with residual maturity of up to or over 60 days will need be valued at the weighted average price at which they are traded on the particular valuation day. Earlier, the valuations norms were applicable only if the residual maturity was up to or over 91 days.
Further, as part of its attempts to further enhance transparency, Sebi has directed the asset management companies to disclose all details of debt and money market securities transacted (including inter scheme transfers) in its schemes portfolio on their respective website.
This information will also need to be forwarded to Association of Mutual Funds in India (AMFI). These disclosures will be made settlement date wise on daily basis with a time lag of 30 days.
On a different note, the regulator has also amended the advertisement code for mutual funds who will now require to disclose the dividends declared or paid in rupees per unit along with the face value of each unit of that scheme and the prevailing net asset value (NAV) at the time of declaration of the dividend. The fall in NAV post the dividend or bonus payout will also form a part of the advertisement. The impact of distribution taxes, if any, will also need to be properly disclosed.
In a separate circular, Sebi has clarified that the due diligence of distributors is solely the responsibility of mutual funds/AMCs. This responsibility shall not be delegated to any agency. However, mutual funds/AMCs may take assistance of an agency of repute while carrying out due diligence process of distributors, said the circular.
Sebi has also amended the way it addressed the issue of conflict of interest wherein a fund manager was managing more than on scheme. Sebi had mandated that the AMC needs to appoint separate fund manager for each separate fund managed by it unless the investment objectives and assets allocations are the same and the portfolio is replicated across all the funds managed by the fund manager.
Based on representations by the fund industry, the regulator has now decided that a replication of a minimum 70% of portfolio value will be considered as adequate for the purpose of compliance with the regulatory norms as a perfect replication across schemes is not always possible. The AMC, however, has to have in place a written policy for trade allocation and will have to ensure that the fund manager is not taking directionally opposite positions in the schemes managed by him.
The AMCs will have to disclose on its websites, the returns provided by the fund manager for all the schemes managed by him on a monthly basis. In case the difference between the annual returns provided by the schemes managed by the same fund manager is more than 10% then the same will have to be reported to the trustee and explanation for the same will need to be disclosed on the website of the AMC.