Very soon, you may see Amitabh Bachchan, Salman Khan or Virat Kohli promoting investments in mutual funds. SEBI, in its board meeting held recently in Jaipur, has decided to allow celebrity endorsement of mutual funds at an industry level.
Simply put, celebrities are not allowed to endorse a particular scheme or promote a fund house; instead, they can promote mutual funds at an industry level by promoting fundamental concepts such as benefits of long-term investments, starting an SIP to create wealth and managing cash flows through liquid funds.
Following SEBI’s diktat, fund houses are required to contribute one basis point of AUM to AMFI. Based on AUM of Rs.16.46 lakh crore as on December 2016, AMFI will have close Rs.165 crore at its discretion to spend on creating awareness about mutual funds this year. AMFI may use this corpus for celebrity endorsements.
G PradeepKumar, CEO, Union MF and Vice Chairman AMFI said that the move would help industry to grow. “AMFI has been requesting SEBI to allow celebrity endorsement in mutual funds for years. We will definitely explore this opportunity in the next board meeting. So far, mutual funds were the only product which was not allowed to use celebrity endorsements despite that the fact that mutual funds are well regulated, transparent and best suited for investors to achieve long term financial goals.”
A section of the industry feels that AMFI should not use celebrities to promote mutual funds. “I’m not in favour of getting celebrities to endorse mutual funds through celebrities. Instead, AMFI should talk about how mutual funds can help people achieve their life goals. It should be for common good. Also, we need to simplify the content of IAP messages by avoiding jargon,” suggests the CEO of a private fund house.
SEBI has clarified that AMFI will have to take prior approval of SEBI before issuing such advertisements.
In addition, SEBI has decided to allow fund house to advertise CAGR returns for the past 1 year, 3 years, 5 years and since inception. Currently, AMCs can only publish scheme’s returns for twelve months period. Also, fund houses can advertise performance of other schemes managed by the fund manager. On web advertisements, AMCs can now provide back link to give a summarized information on returns.
In a circular issued by SEBI, it has said, “SEBI Board deliberated the proposals relating to review of existing advertisement guidelines for mutual funds. It considered that the existing guidelines on publishing performance of schemes in advertisements issued by mutual funds should be reviewed, so that performance related information may be disclosed in a simpler and effective manner, while providing precise & latest information to investors.”
