SEBI's new guidelines make it compulsory for mutual fund ads to show returns
Apart from revealing the returns and the growth rate, the Sebi guidelines put restrictions on celebrity endorsements.
The stock market watch the Securities and Exchange Board of India (SEBI) has issued new guidelines regarding mutual fund advertising. From the beginning itself companies with mutual funds will have to give the calculations 1,3 and 5 years of compound annual growth rate (CAGR) returns.
The fund manager's returns will also have to be given in the advertisement. It will also tell you how much the returns were against the benchmark. The advertisements will have to explain the returns against an investment of Rs 10,000.
The expansion structure of the scheme must also be clearly stated in the advertisement, said the Sebi guidelines. They will also have to show in the ads the returns from the direct plan and indirect plan.
Even if the fund manager of the scheme has remained the same or changed will also have to mentioned.
Mutual funds can however use celebrities for endorsement in order to build awareness, said Sebi. It further added that celebrity endorsement will be at the level of industry and not at mutual fund company level.
However, celebrity endorsement cannot promote the scheme of any one mutual fund. Mutual fund companies cannot use celebrity endorsements for their branding or promotion.
Besides this, mutual fund companies will also have to take Sebi approval depending on the type of product they are advertising.