Amfi gag on mutual fund advertisements, future return calculations

The Association of Mutual Funds in India (Amfi) has put a cap on expected returns that mutual funds (MFs) showcase in their illustrations and calculators. These caps are linked to long-term returns generated by each asset class.

The industry body has set the maximum return range for MF calculators and tools like goal planning at 13 per cent.

Going by the 10-year rolling returns, the maximum future return used in illustrations of equity schemes has to be less than 13 per cent. According to the communication issued by Amfi to fund houses, Nifty 50 has delivered 12.93 per cent during the period, while Sensex has given 12.64 per cent.

For fixed income schemes, the cap is 7.2 per cent. The maximum return used in illustrations of hybrid funds can range from 8.5 to 10 per cent.

Amfi has come out with the guidelines after the regulator's observation that some AMCs were not complying with its advertisement code.