The Market Regulator, Securities and Exchange Board of India (SEBI) has issued the guidelines on Disclosure of risk-o-meter of scheme, benchmark and portfolio details to the investors.
SEBI has mandated mutual funds to disclose to the investors in which the unit holders are invested as on the date on which the disclosures are stipulated namely risk-o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and details of the portfolio while communicating the fortnightly, monthly and half-yearly statement of scheme portfolio via email.
It has been clarified that AMCs shall disclose in all disclosures, including promotional material or that stipulated by SEBI namely risk-o-meter of the scheme wherever the performance of the scheme is disclosed; and risk-o-meter of the scheme and benchmark wherever the performance of the scheme vis-à-vis that of the benchmark is disclosed.
The portfolio disclosure in terms of para 3 of SEBI circular dated June 5, 2018 on ‘Go Green Initiative in Mutual Funds’ shall also include the scheme risk-o-meter, name of benchmark and risk-o-meter of benchmark.
The disclosure requirement of the risk-o-meter of benchmark is applicable for primary benchmark which is specified in the Scheme Information Document.
For international benchmarks, risk-o-meter score may be assigned in line with risk-o-meter score assigned to foreign securities as specified in SEBI circular on Product Labeling in Mutual Fund schemes –Risk-o-meter dated October 5, 2020.
AMCs shall enter into arrangements with their selected Index providers to provide the risk-o-meter for their benchmarks to the AMCs latest by the fifth day subsequent to the end of the month.
“The provisions of this circular shall be applicable with effect from October 1, 2021. However, AMCs may choose to adopt the provisions of this circular before the effective date 9. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market,” the market regulator in the circular said.
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