Mumbai: The market regulator Sebi Monday prohibited mutual fund companies from showing indicative portfolio and yields in their debt and fixed income schemes, as the practice is misleading investors.
“It is...decided that the mutual funds shall not offer any indicative portfolio and indicative yield. No communication regarding the same in any manner, whatsoever, shall be issued by any mutual fund or distributors of its products,” Sebi said in a circular.
The market watchdog further said its advisory committee on mutual funds discussed the practice of mutual funds offering indicative portfolios and indicative yields, and there was consensus that the practice should be prohibited as it misleads the investors.
The circular added the compliance of the directive shall be monitored by the asset management companies, trustees and submit their respective reports to Sebi.
Mutual fund tracking firm Value Research CEO Dhirendra Kumar said, “This is a step in the right direction and is formalising the obvious, as giving indicative portfolios and yield is actually misleading the investors. It would not be a disadvantage for the fund houses, as all are prohibited from doing so.”