Fund
houses welcome showcasing geography wise AUM data.
Mumbai: SEBI has
issued a host of disclosure norms for the fund houses pertaining to
advertisements, AUMs and commissions. We spoke to some industry experts on what
it means for the industry.
Commission Disclosure
According to
distributors, SEBI is asking fund houses to disclose the details of commissions
paid to each big distributor who fits the criteria laid out in SEBI circular.
This data is also required to be published on AMC’s website and on the AMFI
website.
Performance Disclosure
In
advertisements, the performance of equity fund will be benchmarked against
Sensex or Nifty, and long term debt schemes and short term debt schemes will be
benchmarked against 10 year GOI security and one year T-Bill respectively.
In a bid to communicate the returns in simple
terms to investors, AMCs will be required to give out point to point returns on
a standard investment of Rs 10,000 in addition to the CAGR.
“It would be
beneficial because now investors can be shown point to point returns. Earlier
people did not understand what CAGR is and what it means for them. Initially it
does look like we have to provide too much data in advertisements,” says Himanshu
Vyapak, Executive Vice President, Reliance Mutual Fund.
In all performance related ads, AMCs will have to disclose the
performance of all funds managed by the fund manager. If the fund manager is
managing more than six schemes then the performance of top three and bottom
three funds have to be displayed in addition to the performance of the scheme
which is being advertised. The ads will also show the total number of schemes
managed by the fund manager. The move is likely to increase the advertisement costs
for AMCs.
AUM Disclosure
SEBI has directed AMCs to disclose the breakup of
AUM details in the form of equity, debt, and balanced assets. Fund houses will
further be required to display the percentage of assets originating from
various geographies (i.e. top 5 cities, next 10 cities, next 20 cities, next 75
cities and others) on their websites. AMFI will in turn disclose this data on
its site.
Fund houses have welcomed this move as it shows
the strength of an AMC in penetrating smaller towns.
“SEBI wants to see the stability of the money flowing in the industry. So far people were just analyzing the gross AUM; now the industry will get to see from which city the money is coming in. It is positive in the long term for the industry,” adds Himanshu.
