Sebi ushers in strict disclosure norms for mutual funds

To ensure more transparency in the mutual funds industry, Sebi today asked the players to make monthly disclosures about their assets under management for different schemes.
The measure is part of the capital market watchdog's long term policy for mutual funds to make them as an attractive investment opportunity for retail investors.
Sebi's board, which met here today, decided that mutual funds should disclose their Assets Under Management (AUM) for different categories for schemes on a "monthly basis" on their respective websites.
Besides, the data has to put on a consolidated basis on website of Association of Mutual Funds of India (AMFI).

The move, Sebi said, is to "enhance transparency and improve the quality of the disclosures".
AUM from different categories of schemes such as equity and debt schemes, from B-15 cities, contribution of sponsor and its associates in AUM of schemes of their mutual funds as well as AUM garnered through sponsor group/ non-sponsor group distributors should be disclosed.

The issue of investments by group companies in mutual fund schemes has gained importance after leading player Reliance Mutual Fund recently made a voluntary disclosure of such investments and hoped that others would follow suit.
Earlier this week, Religare Invesco MF became the second fund house to make such a disclosure. While the group investments of these two fund houses are relatively small (about three per cent for Reliance and about 1 per cent for Religare MF), such investments are 15-20 per cent for some other MFs.

Going by industry estimates, all the fund houses together have investments totalling over Rs 1 lakh crore in their collective asset base of about Rs 9 lakh crore.
At today's Sebi board meeting, it was also decided that mutual funds should disclose the rationale while exercising their voting rights in investee companies.
"... Voting data along with rationale supporting their decision (for, against or abstain) be disclosed on quarterly basis on their website.
"This is to be certified by auditor annually and reviewed by board of AMC (Asset Management Company) and Trustees," the Securities and Exchange Board of India (Sebi) said.