In a consultation paper, SEBI has proposed that fund houses should make half yearly financial disclosure of direct plans in line with regular plans.
Currently, AMCs disclose expense ratio, returns and yields of all regular plans through such a disclosure. SEBI said, “Considering that the expenses, expense ratio, returns and yields for direct plans and regular plans are different, it is proposed that such disclosures pertaining to both direct plan as well as regular plan may be disclosed in a standard format.”
With this, the fund houses will soon make half-yearly disclosure of unaudited financial results of schemes, which includes disclosure of total recurring expenses, returns during the half year and compounded annualized yield.
In addition, fund houses may have to make a separate disclosure for returns during the half year and compounded annually yields for both direct and regular plans.
SEBI has directed AMFI to issue standardize format in which these disclosures will be made.
The market regulator believes that this will enhance transparency. “Under the current regulatory framework for Mutual Funds, various disclosure requirements have been mandated, which include disclosures by Mutual Funds with respect to scheme expenses and risks pertaining to a particular scheme. In order to facilitate enhanced transparency, ease of comprehension and a standardised approach towards disclosures by the Mutual Fund industry, certain changes have been proposed in this consultation paper which will further aid in informed decision making by investors.”
You can submit your feedback to SEBI by October 18, 2024.
