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MF News Be careful about MF advertisements: SEBI to fund houses

Be careful about MF advertisements: SEBI to fund houses

Mutual fund advertisement should be clear, lucid and realistic.
Nishant Patnaik Jul 9, 2018

G Mahalingam, Whole Time Member, SEBI has cautioned fund houses to be careful about their advertisements. He was addressing fund officials at an industry event held recently in Mumbai.

Mahalingam said that the responsibility of industry and the regulator has become onerous with growing popularity of mutual funds among retail investors. He said, “If an industry does not grow then the regulator has nothing to do but if the industry is growing very fast, the regulator has to see that the growth is evenly paced and that it is not a bubble.”

He further said, “With increasing awareness about mutual funds, the industry needs to be very careful about advertisements. These advertisements should not give mis-information. We want people to keep investing in mutual funds. They should not be disenchanted and leave the product category.”

Talking about the way forward, he said that the industry should grow in a responsible way. Hence, advertisements should be clear, lucid and realistic. “You cannot paint a picture of returns which is multifold compared to the bank deposits. Though equity can be rewarding over a long term, you should not lure people by highlighting that the product has given 25-30% odd returns. You should set reasonable expectation from the beginning.”

Last year, SEBI has stipulated that ads must give a point-to-point returns chart on a standard investment of Rs.10,000 to help investors understand better. SEBI has also instructed them that a distinction must be made between the performance of regular and direct plans along-with a footnote mentioning that different plans have different expense structures.

In addition, SEBI has allowed celebrity endorsements at industry level to increase awareness about mutual funds.

 

8 Comments
Yogesh Laddha · 1 week ago
Sir, Why Paisa Bazar is Openly Doing Advertisement of Direct Schemes. Many Mails Marked to AMFI but not Result Yet. Because of this, only Existing Investors are being Spoiled besides taking fetching New Business. Some time looks SEBI is so Strict & Some time does nothing.
Rk · 1 week ago
Sir, guide me what hidden charges charged by paisabazar.com by me. He do business not jab sewa.
Uttam kumar · 1 week ago
What paisabazar is doing it is totally blunder mutual fund is not like go and buy straight away neither paisa bazar have representatives every where for hand holding services and monitoring time when and at what time portfolio in different caps and many more thing mutual fund is about learning and updates all thr time it will only ruin mutual fund industry the it is advertised.sebi should take action against him.
Dhaval purohit · 1 week ago
Its very disappointing that sebi is not doing anything about direct plan advertisement, like in paisabazaar ad, akshay kumar clearly says "diect plans means more return". Sebi should not let this happen.
S MURALIDHARAN · 1 week ago
I just do not understand why there is always a terrible focus on Direct plans. A few BPS difference in the returns would not be a great issue with a discerning investor. It makes distributors look unwanted and villainous. Even some of the AMCs take delight in talking about Direct plans as it leaves a little more money on the table for them. Distributors have a role to play and they also need their sustenance. They also give employment to many people and there are many MF platforms who benefit from them. Even BSE and NSE have their distributor problems. A respectable portal like cafemutual is distributor oriented as they realize that distributors play an important role in spreading awareness about MFs. I would request Cafemutual to take initiative in reducing this nightmare of anti distributor diatribe . It is my humble request that the focus should be shifted to scaling up the Distributorship business and help them to become more professional. This is possible only if the business is a sustainable business model. This business model of distributorship may please be spared from being eliminated totally.
PRASHANT · 1 week ago
Very well said. The points you made are perfect except about cafe mutual.
Reply
Shankar la · 1 week ago
SEBI also aware the befits of both direct plans and regular schemes. All ditributers work very hard when no support from any side .
Shivkumar Kalra · 1 week ago
Nationalized Bank should also be requested to print below their FD certificates "FD certificates are subject to Credit Risk" or "FD certificates are backed and guaranteed by Govt. of India".
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