SUBSCRIBE NEWSLETTER
  • Change Language
  • English
  • Hindi
  • Marathi
  • Gujarati
  • Punjabi
  • Tamil
  • Telugu
  • Bengali
  • MF News SEBI frets at rating agency awards

    SEBI frets at rating agency awards

    SEBI wants mutual funds to evolve a common policy for ensuring arm’s length relationship with rating agencies
    Ravi Samalad Jan 8, 2011

    SEBI wants mutual funds to evolve a common policy for ensuring arm’s length relationship with rating agencies

    Mumbai: SEBI has asked mutual funds to maintain an arm’s length relationship with rating agencies. The regulator has also expressed concerns at rating agencies giving awards to schemes.

    Mutual funds should evolve a common policy for maintaining arm’s length relationship with rating agencies, K N Vaidyanathan, Executive Director, SEBI, said in response to a question by Ashu Suyash, Managing Director of Fidelity Mutual Fund, at a seminar in Mumbai on Friday.

    He further said mutual funds should have “sharper” definition of schemes based on their investment strategies and cautioned fund houses against indulging in performance window dressing.

     

    “Let us assume, one fund delivers a 17 per cent return with consistent churning and another similar fund has delivered identical returns by a buy-hold strategy. Can this performance be conveyed to the investor?” Vaidyanathan asked.

     

    He said 40-50 per cent of mutual fund schemes have customised benchmarks. He suggested that mutual funds adopt widely followed benchmarks like Sensex or Nifty as the first benchmark and a second one that’s relevant to the scheme objective. “If we have a consistent comparison to Sensex or Nifty, it would make sense to the investors,” said Vaidyanathan.

     

    About eight fund houses have started using Sensex or Nifty as their primary benchmarks.

    On a question by Cafemutual on SEBI’s plans to regulate mutual fund distributors, Vaidyanathan said, “Over time all stakeholders in the market will be regulated by SEBI”.

    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

    Click to clap
    Disclaimer: Cafemutual is an industry platform of mutual fund professionals. Our visitors are requested to maintain the decorum of the platform when expressing their thoughts and commenting on articles. Viewers are advised to refrain from making defamatory allegations against individuals. Those making abusive language or defamatory allegations will be blocked from accessing the web site.
    0 Comment
    Be the first to comment.
    Login or Sign up to post comments.
    More than 2,07,000 of your industry peers are staying on top of their game by receiving daily tips, ideas and articles on growth strategies. Join them and stay updated by subscribing to Cafemutual newsletters.

    Fill in the below details or write to newsdesk@cafemutual.com and subscribe to Cafemutual Newsletter now.