In a circular issued this week, the Securities and Exchange Board of India (SEBI) has released guidelines for NAV, portfolio and annual report disclosure. Fund houses (AMCs) are now required to disclose their NAVs, portfolios and annual reports on the websites and on the Association of Mutual Funds of India (AMFI) website. The requirement to publish NAVs in newspapers has been removed. AMCs have to implement the circular within one month’s time. The circular was issued on 5th June 2018.
In a separate circular on the same day, SEBI has also asked AMCs to disclosure their Total Expense Ratios (TERs) on a daily basis on their website and on the AMFI website. The break-up of the total TER into base TER, additional expenses in lieu of exit load and additional expenses for coverage beyond the top 30 cities and expenses for GST must also be disclosed. Any increase (but not decrease) in the base TER must be communicated to investors by email/SMS and updated online, three days before the changes go into effect. This is why you may have been receiving all those TER emails in your inbox.
AMCs will be required to disclose their NAVs on their respective websites and on the AMFI website. They will also be required to send latest NAVs by SMS to unitholders on request. They will be required to provide the methodology for calculating the sale/repurchase of MF units on their websites with simple examples. They will not be required to disclose NAVs in newspapers as was previously required.
AMCs will have to release their annual report on their own website and on the AMFI website. They will have to email such reports to investors whose email addresses are registered with the fund.
They must send a letter to unitholders whose email addresses are not registered with the fund giving them the option of opting to receive the annual report/abridged summary in physical form. They must also provide a physical copy of the abridged summary of the annual report to a unitholder on request
Monthly and Half-yearly Portfolio
AMCs will have to disclose portfolios for all their schemes each month/half year within 10 days of the close of the month/ half year. The disclosure will have to be done on their own website and on the AMFI website, in a user-friendly and downloadable spreadsheet format.
AMCs will also have to email both the monthly and half-yearly portfolios to unitholders whose email is registered with the fund within 10 days of the close of the month/half year.
They shall be required to publish an advertisement every half-year in two newspapers announcing the disclosure of their portfolio on the fund and AMFI websites and the modes through which an investor can request a copy of the portfolio. They will provide a physical copy of the portfolio, free of cost, on request from a unitholder.