Under new guidelines, funds need to keep the investor abreast of all the possibilities and prospects of the scheme
Markets regulator Securities and Exchange Board of India (Sebi) on Monday gave time till September 1 for mutual funds to comply with the new rules where they are required to share details of risks, performance and portfolio to investors only for the scheme in which they have invested.
The new guidelines were to come into effect from June 1. “Based on a representation received from industry body Association of Mutual Funds of India (Amfi), it has been decided to extend the implementation date to September 1, 2021,” Sebi said in a circular.
In late April, the regulator had asked mutual funds to make disclosures about scheme risk-o-meter, performance and portfolio details to investors only for the particular plans in which they have invested.
This was aimed at enhancing the quality of disclosure with respect to risks and performance, and portfolio of the schemes without creating information overload for the investors.
Under the new rules, mutual funds need to “disclose risk-o-meter of the scheme and benchmark while disclosing the performance of scheme vis-a-vis benchmark”. They need to send the details of the scheme portfolio while communicating the fortnightly, monthly and half-yearly statement of the scheme portfolio via e-mail.
The disclosures need to be made to the investor only for the schemes in which the unitholders are invested as on the date on which the disclosures are stipulated.
In October 2020, Sebi revamped the product labelling for mutual fund schemes under the risk-o-meter by introducing the “very high risk” category to warn investors. This was in addition to the existing five categories to measure risks – low, low to moderate, moderate, moderately high, and high.