Disclosure of expenses, half yearly returns, yield and risk-o-meter of schemes of Mutual Funds
Summary
This circular mandates separate disclosures for expenses, half-yearly returns, and yield for both direct and regular plans of mutual fund schemes. It introduces a standardized color scheme for the Risk-o-meter across all digital and printed promotional materials. Additionally, it requires mutual funds to disclose both existing and revised risk levels when there is a change in the Risk-o-meter.
Text
The expenses disclosed... shall contain separate disclosures for total recurring expenses for direct and regular plans, apart from the disclosure of total recurring expenses of the scheme.
returns during the half year and compounded annualized yields respectively shall be separately disclosed for direct and regular plans.
To standardise the above disclosures, the format for half-yearly financial statement for MF schemes shall be reviewed and finalised by AMFI, in consultation with SEBI.
For all other regulatory disclosures where expenses, expense ratio, returns and/or yield of the schemes are required to be disclosed, separate disclosures shall be made for both regular and direct plans.
Risk-o-meter shall have following six levels of risk for mutual funds with the given colour scheme – i. Low Risk – Irish Green [#08A04B] ii. Low to Moderate Risk –Chartreuse [#7FFF00] iii. Moderate Risk – Neon Yellow [#FFFF33] iv. Moderately High Risk – Caramel [#C68E17] v. High Risk – Dark Orange [#FF8C00] vi. Very High Risk-Red [#F70D1A]
Riskometer: Risk level of the scheme shall be depicted by “Risk-o-meter” as given below – The risk of the scheme/benchmark is [level of risk]
Any change in risk-o-meter of the scheme or its benchmark shall be communicated by way of Notice cum Addendum and by way of an e-mail or SMS to unitholders of that particular scheme. The format for disclosure of change in Risk-o-meter shall be as under: Name of the Scheme(s) Existing Risk-o-meter of Scheme/Benchmark Revised Risk-o-meter of Scheme/Benchmark
The provisions of this circular shall come into effect from December 05, 2024.
Source: SecMarx — Disclosure of expenses, half yearly returns, yield and risk-o-meter of schemes of Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.