SEBI directs Mutual Funds to disclose expenses, half yearly returns, yield and risk-o-meter of schemes
Under the current regulatory framework for Mutual Funds, various disclosure requirements have been mandated, which include disclosures by Mutual Funds with respect to expenses and risks pertaining to schemes.
Based on the recommendation of Mutual Fund Advisory Committee, the disclosure of the following has been decided:
A. Disclosure of expenses, half yearly returns and yield of a scheme. To standardise it , the format for half-yearly financial statement for MF schemes shall be reviewed and finalised by AMFI, in consultation with SEBI.
B. Colour Scheme for Risk-o-meter. 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. Accordingly, Risk-o-meter shall have six levels of risk for mutual funds with the given colour scheme-
i. Low Risk –Irish Green
ii. Low to Moderate Risk –Chartreuse
iii. Moderate Risk –Neon Yellow
iv. Moderately High Risk –Caramel
v. High Risk –Dark Orange
vi. Very High Risk –Red
C. Disclosure of change in Risk-o-meter 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. In order to standardise the format of disclosure and for ease of understanding of the change in level of risk for unitholders, the Mutual Funds shall disclose the existing risk-o-meter along with the revised risk-o-meter.
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