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In line with the advertisement code, SEBI has asked fund houses not to use return projections in any marketing communication and investor awareness programs (IAPs), confirmed three MF officials requesting anonymity.
“The regulator has said that the advertisement code issued by SEBI in March will be applicable across all marketing communication and IAPs. Simply put, we cannot use any kind of projection to indicate return of mutual funds,” said a senior MF official.
Another official said that AMCs cannot use return illustration or assume return to explain benefits of investing in mutual funds for goals planning like children education or retirement planning.
In an advertisement code, SEBI said that while illustrations depict future returns based on assumptions and projections, such a disclaimer is made in fine print that investors may miss out. It said, “Such disclosures are ambiguous and likely to be misunderstood by investors and are not in compliance with letter and spirit of provision of sixth schedule of SEBI (Mutual Funds) Regulations, 1996.”
