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Did You Know? Celebrities cannot endorse mutual funds

Did You Know? Celebrities cannot endorse mutual funds
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First Published: Thu, Feb 04 2010. 09 28 PM IST

Updated: Thu, Feb 04 2010. 09 28 PM IST
You see Sachin Tendulkar recommending insurance plans, but have you ever seen any celebrity endorsing a mutual fund (MF)? The Securities and Exchange Board of India (Sebi) has banned MFs from doing so.
Why so? To avoid mis-selling of funds, over the years, Sebi has laid down a series of guidelines and regulations on how MFs should advertise their schemes and services. In the US, although there are strict regulations to govern advertisements of MFs, it allows the use of celebrities. For instance, legendary Beetles singer, Paul McCartney, endorsed Fidelity MF in a televised commercial in 2005.
Does it matter? MFs aren’t supposed to assure returns. When a celebrity endorses a product, experts say that his star value may induce investors to follow the advice without considering the risks involved.
Indian laws: Sebi keeps reviewing its advertising policy consistently. For instance, the standard warning that fund houses are mandated to flash are supposed to be displayed for five seconds and need to be read in an understandable manner and not in a haste.
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First Published: Thu, Feb 04 2010. 09 28 PM IST