Sebi asks AMCs to share info on risk, scheme performance in 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.

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