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  • MF News Direct plans will now have separate disclosures of expense ratio and returns

    Direct plans will now have separate disclosures of expense ratio and returns

    SEBI issues guidelines to make direct plans more transparent.
    Kushan Shah Nov 6, 2024

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    In its latest circular, SEBI has made it mandatory for AMCs to have separate disclosures of expense ratios, returns and yields for direct and regular plans. The regulator aims to facilitate enhanced transparency, ease of comprehension by investors and a standardized approach towards disclosures by the MF industry with this new regulation.

    Currently, AMCs disclose expense ratio, returns and yields only for regular plans of their schemes. SEBI had proposed to have similar disclosures for direct plans in a consultation paper released in September based on the recommendations made by the Mutual Fund Advisory Committee and had asked for public comments on the same. 

    In addition, SEBI has also finalized the color scheme of the risk-o-meter with six colors showing different levels of risk.

    The six colors finalized for the risk levels are:

    • Low risk – Irish green
    • Low to moderate risk – Chartreuse
    • Moderate risk – Neon yellow
    • Moderately high risk – Caramel
    • High risk – Dark orange
    • Very high risk – Red

    The regulator has also asked AMCs to communicate the change in risk-o-meter of the scheme to its unitholders alongside the old risk-o-meter through email or SMS. This would look like this:

    The circular will come into effect from December 5, 2024.

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    4 Comments
    DILLIP KUMAR SWAIN · 1 month ago `
    Is expense ratio inbuilt of GST in direct plans. Who is borne gst AMC OR DIRECT INVESTOR in case of direct plans
    jaseem hameed · 1 month ago `
    Wow...Transparency at its peak...that's why previous sebi cheap sorry chief get exposed....
    Vivek Shah · 1 month ago `
    WE should demand SEBI to enforce AMCs to display how much is paid to Fund Manager and how much share AMC take from Expense Ratio.
    Vijayshree Karwa · 4 weeks ago `
    SEBI can re-look at direct plan. Allow direct plan for institutional and ultra HNIs only. Retail investors still need education on investments and it's effect on their lifes. They prefer to save small amount but end up loosing more than what they get benefitted.

    SEBI can look to focus more on retail investors and protect their interest.
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