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  • MF News SEBI to regulate mutual fund rankings

    SEBI to regulate mutual fund rankings

    The market regulator has proposed to monitor activities of fund ranking companies like Value Research and Morningstar.
    Team Cafemutual Jun 26, 2017

    In order to bring transparency across mutual fund ranking agencies, such as Value Research and Morningstar, SEBI has proposed that such companies will now have to register with the market regulator as research analyst.

    In a consultation paper, SEBI said, “Considering the activity of ranking of mutual fund schemes as research report to the public that services as a basis for their investment decision, it is proposed that the activity of ranking of MF schemes shall be brought under the regulatory ambit of SEBI (Research Analysts) Regulations 2014.”

    Here are a few key proposals

    • Ranking agencies will have to put in place a clearly defined methodology
    • Such companies can rank the performance of mutual fund schemes based on quantitative performance measurements
    • These companies will have to disclose the criteria, name of category, number of funds in the category and the data used for ranking different schemes
    • Such disclosures should be present in a manner that is easily understandable by investors
    • They should also disclose the holding of the promoters and directors in a scheme
    • If ranking agencies choose not to rate a particular scheme, they will have to display the reason for non-inclusion prominently
    • These companies should act independent of AMCs. This means, such companies cannot accept any consideration to rank mutual funds
    • All rankings should be accompanied with the disclaimer that ‘the past performance is no guarantee of future returns.’ Also, it should be accompanied with the standard disclaimer that ‘Mutual fund investments are subject to market risks, read all scheme related documents carefully.’

    SEBI has invited public comment before July 14, 20

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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    7 Comments
    Anand Swarup · 6 years ago `
    It is good for investors & IFA for taking decision of investment
    N.C.RAMESH · 6 years ago `
    IT IS AN EXCELLANTMOVE! THEINVESTORS WILL HAVEA BETTER UNDERSTANDING.
    M G Pillai · 6 years ago `
    Good Intiative.
    mfinvestinfo · 6 years ago `
    it will help to us to identify properly of better schemes
    Prashant · 6 years ago `
    This is not for us but for direct investors. SEBI doing everything in it can to kill our bread and butter.
    Anil K Jain · 6 years ago `
    It's a late move by SEBI to regulate rating agencies. Rating methodologies should be standardised otherwise multiple agencies will rate schemes differently. Further each schemes should be provided a wide classification by the AMFI or SEBI. AMCs should also be asked to disclose capacity to manage and fix collection targets annually based on their capabilities subject to regulatory approval.
    S K Poddar · 6 years ago `
    SEBI should look into the matter of conflict of interest by Rating agencies. Advertisers/sponsors do influence such activities. We tend to ignore the bigger issues of manipulations of NAV and front running activities by leading fund houses. They pay CONSENT FEES and get away with murder. God knows who will protect the investing public.
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