The revised product labelling guidelines will be effective from July 01.
AMFI has come out with fresh set of guidelines for product labelling to standardize the methodology for colour coding schemes.
SEBI had introduced product labelling so that investors can make an informed choice regarding the suitability of products based on their risk appetite.
As per earlier SEBI guidelines, schemes with low risk were denoted with blue colour, those with medium risk were assigned yellow and schemes with high risk brown colour mark.
However, there was confusion regarding its implementation among AMCs. AMCs were following different methods to classify their schemes. To end this confusion, SEBI had asked AMFI to standardize the methodology for uniform application of product labelling across industry.
Here are the new product labelling guidelines:
- All debt-oriented schemes, comparatively lower in risk, will be denoted with ‘Blue’ colour.
- All diversified/blended schemes, with a mix of debt and equity into the portfolio construct, will be assigned ‘yellow’ colour to indicate moderate risk.
- All equity-oriented schemes will have ‘brown’ colour to show higher risk.
- All static allocations domestic feeder funds which have a predominant equity allocation will be colour-coded as ‘brown’ and which have a predominant debt allocation should be colour coded as ‘yellow’
- All active allocations domestic feeder funds (i.e., where the allocation is based on a model or parameter etc.) will be colour-coded as ‘brown’
- All foreign feeder funds will be colour-coded as ‘brown’
The revised guidelines will be effective from July 01.
