The new advertisement guidelines have made mutual fund ads cluttered and consume more space which increases AMC costs.
Mumbai: SEBI may relax the recently introduced advertisement rules which require AMCs to display the performance data of all the other schemes managed by the fund manager of that particular scheme in advertisements. Fund houses are complaining that it is difficult to advertise the performance of all schemes managed by one fund manager and it increases the space and cost. “There has been a discussion with SEBI on relaxing the advertisement guidelines," said Srinivas Jain, CMO, SBI Mutual Fund.
“When the performance of a particular mutual fund scheme is advertised, the advertisement shall also include the performance data of all the other schemes managed by the fund manager of that particular scheme. Performance advertisement shall be provided since inception and for as many twelve month periods as possible for the last 3 years, such periods being counted from the last day of the calendar quarter preceding the date of advertisement, along with benchmark index performance for the same periods,” stated SEBI circular.
The circular states that fund houses should display the top three and bottom three funds if the fund manager is managing more than six schemes. It also mandates AMCs to mention the number of schemes managed by that particular fund manager.
“It consumes a lot of space. SEBI is considering relaxing some of the advertisement rules,” said a sales head of a top AMC.
Fund officials are of the view that the new advertising guidelines are making their advertisements ineffective. “My advertisement would look cluttered and my message gets lost," said Vijai Mantri, MD & CEO of Pramerica Mutual Fund.
For the sake of standardization, SEBI has also mandated fund houses to show point to point return on a standard investment of Rs. 10,000 and benchmark equity schemes against Sensex or Nifty in addition to scheme’s existing benchmark. For long term debt schemes and short term debt schemes it has asked AMCs to benchmark against 10 year GoI security and 1 year Treasury bill respectively. To comply with this rule, AMFI had asked CRISIL to construct two benchmarks. Cafemutual had reported that there were no benchmarks to track 10 year GoI security or 1 year Treasury bill. (Read here)
According to some media reports, fund houses have raised a number of issues with the regulator. Among them are banning upfront commissions, introducing share-class structure, extending exit load period, and relaxing KYC norms for qualified foreign investors (QFIs).
Some fund officials believe that SEBI may not ban upfront commission considering the current state of affairs.
“We don’t agree with banning upfront commissions. IFAs need upfront commissions to sustain their business. Upfront is not banned in any country. There is no entry load and the transaction charges are not adequate to compensate IFAs. We are paying from our own pockets. I don’t think SEBI will ban upfront,” said a sales head of a large AMC.
“We don’t have to seek permission to extend or increase exit loads from SEBI. We can just issue an addendum by giving a chance to investors to exit the scheme. There are already schemes which have high exit load,” added the official.
