The Securities and Exchange Board of India (SEBI) on November 05, 2024, issued a circular regarding the disclosure of expenses, half-yearly returns, yield and risk-o-meter of schemes of Mutual Funds.
Based on the recommendation of the Mutual Fund Advisory Committee, the following has been decided:
• Investments under the direct plan of a mutual fund scheme, which was introduced vide circular dated September 13, 2012, and came into effect from January 01, 2013, are investments which are not routed through distributors of Mutual Funds. As distribution expenses and commission cannot be charged to investors of a direct plan, the expense ratio of a direct plan of any scheme is lower than that of the regular plan of the same scheme and hence the returns of the direct and regular plans also differ.
• Clause 17.4 of the Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/90 dated June 27, 2024 for Mutual Funds (“Master Circular”), specifies the provisions pertaining to product labelling in Mutual Funds. Based on the recommendation of MFAC, it has been decided that in addition to the existing labels relating to levels of risk i.e. Low, Low to Moderate, Moderate, Moderately High, High and Very High, the Risk-o-meter shall also be depicted using a colour scheme.
• As per clause 17.4.1 (h) of the Master circular, any change in the risk-o-meter shall be communicated to unitholders of that particular scheme by way of a Notice cum Addendum as well as an e-mail or SMS.
The provisions of this circular shall come into effect from December 05, 2024.
[Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 ]
