SEBI Proposes a Standardized Format for Disclosure of Change in Risk-O-Meters of Mutual Fund Schemes and Its Benchmark

Consultation Paper; Dated: 27.09.2024

SEBI has released a Consultation Paper on a draft circular regarding disclosing expenses, half-yearly returns, yield, and risk-o-meter of Mutual Fund (MF) schemes.

Regulation 59 of the SEBI (Mutual Funds) Regulations, 1996 requires half-yearly disclosure of unaudited financial results, which inter alia includes disclosure of total recurring expenses, returns during the half-year, and compounded annualised yield. Currently, expenses, expense ratios, returns, and yields of all regular plans are disclosed by Asset Management Companies (AMCs).

Considering that expenses, expense ratios, returns, and yields for direct and regular plans differ, SEBI has proposed that disclosures on both direct and regular plans be disclosed in a standard format.

Further, to enhance the pictorial representation of risk, it is proposed that the risk-o-meter must be colour-coded. SEBI has also proposed standardising the format for disclosing changes in risk-o-meters of an MF scheme and its benchmark. Public comments may be submitted by October 18, 2024.

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