Ever since fund houses have merged schemes, there was a confusion on how they disclose past performance of their schemes.
In order to create a level playing field, SEBI has directed fund houses to follow uniform rules to disclose past performance of their schemes post merger.
Earlier Mutual Fund Advisory Committee (MFAC) has recommended SEBI to issue uniform guidelines on this.
Here is how past performance of the schemes would look post merger.
If two schemes have similar features, fund house will have to disclose the weighted average performance of both the schemes.
If two schemes have different features, fund houses can highlight the weightage average performance of the surviving or retained scheme. However, fund houses can also disclose the past performance of scheme which was not retained post merger on request of investors.
If two schemes merged to form a different scheme altogether, fund houses need not disclose any past performance.
The circular comes into effect from May 1. 2018.