Markets

Celebrity endorsement of mutual funds only at industry level: SEBI

Our Bureau Mumbai | Updated on January 12, 2018 Published on January 14, 2017

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Securities market regulator SEBI has allowed celebrity endorsement of mutual funds only at the industry level and not for promoting a scheme or a brand. However, fund houses have to take prior SEBI approval before featuring ads with celebrities.

Sumit Agrawal, Partner, Suvan Law Advisor & ex- Sebi Official said “Making it easier for asset management companies (AMCs) to advertise, celebrity endorsement at the industry level, promote and sell their schemes while providing flexibility to portray performance in a transparent manner is a welcome empowerment of MFs.”

Reviewing existing advertising guidelines for mutual funds in its board meeting on Saturday, SEBI said performance of other schemes managed by the fund manager shall be disclosed in a summarized manner and in internet-enabled media; Mutual Funds shall be permitted to provide an exact link to such summarized information.

Henceforth, performance of mutual fund schemes shall be advertised in terms of CAGR for the past 1 year, 3 years, 5 years and since inception; in place of current requirement to publish scheme’s returns for as many twelve month periods as possible for the past 3 years. Performance advertisement of mutual fund schemes should provide information based on last day of month-end preceding the date of advertisement, instead of current requirement of publishing such data based on last day of preceding quarter-end.

MF Investment in REITs/InvITs

SEBI mandated that mutual fund schemes shall not invest more than five per cent of its NAV in units of a single issuer of REITs and InvITs. However, this would not be for investments in case of index fund or sector or industry specific scheme pertaining to REITs and InvITs.

In addition, a mutual fund scheme should not invest more than 10 per cent of its NAV in units of REITs and InvITs. This is not applicable for investments in case of index fund or sector or industry specific scheme pertaining to REITs and InvITs, SEBI said.

All the schemes of a fund house put together are not allowed to own more than 10 per cent of units issued by a single issuer of REITs and InvITs.

“Allowing mutual funds to invest in a new class of 'alternative securities' would help in attracting more number of investors into REITs and InvITs. SEBI’s preference has been that retail investors should invest through mutual funds rather than directly. This is a welcome move for fund management community and an indirect route for small investors to get exposure to these securities,” said Agarwal.

The investment restrictions shall apply to all fresh investments by all schemes or an existing scheme, SEBI said.

Published on January 14, 2017
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