Sebi asks AMCs to disclose details of risk, performance of schemes in promotional material

By: |
August 31, 2021 7:34 PM

In order to avoid overload of information on investors, Sebi in April had directed mutual funds to share details of risk, performance and portfolio with investors, only for the schemes in which they have invested.

Markets regulator SebiIn a circular on Tuesday, Sebi clarified that AMCs shall disclose "risk-o-meter of the scheme wherever the performance of the scheme is disclosed and risk-o-meter of the scheme and benchmark wherever the performance of the scheme vis-a-vis that of the benchmark is disclosed" in all disclosures, including promotional material.

Markets regulator Sebi on Tuesday directed asset management companies (AMCs) to disclose details of risk and performance of mutual fund schemes in all disclosures, including promotional material.

In order to avoid overload of information on investors, Sebi in April had directed mutual funds to share details of risk, performance and portfolio with investors, only for the schemes in which they have invested.

In addition, they were asked to disclose risk-o-meter of the scheme vis-a-vis benchmark while disclosing the performance of scheme in the fortnightly, monthly and half-yearly statement through e-mail.

In a circular on Tuesday, Sebi clarified that AMCs shall disclose “risk-o-meter of the scheme wherever the performance of the scheme is disclosed and risk-o-meter of the scheme and benchmark wherever the performance of the scheme vis-a-vis that of the benchmark is disclosed” in all disclosures, including promotional material.

The regulator said portfolio disclosure on ‘Go Green initiative in mutual funds’ will also include the scheme risk-o-meter, name of benchmark and risk-o-meter of benchmark.

The disclosure requirement of the risk-o-meter of benchmark is applicable for primary benchmark which is specified in the scheme information document.

For international benchmarks, Sebi said risk-o-meter score may be assigned in line with risk-o-meter score assigned to foreign securities as specified by the regulator.

With regard to disclosing performance of scheme in the fortnightly, monthly and half-yearly statement through e-mail to investors, AMCs will have to provide a feature wherein a link is provided to investors to their registered e-mail to enable the investor to directly view/download only the portfolio of schemes subscribed by the investor.

In addition, AMCs will have to enter into arrangements with their selected index providers to provide the risk-o-meter for their benchmarks to the AMCs latest by the fifth day subsequent to the end of the month.

The new framework will be applicable with effect from October 1, 2021. However, AMCs may choose to adopt the framework before the effective date.

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