Sebi plans half-yearly disclosures for direct plan mutual fund schemes

Also proposes colour-coded risk-o-meter

The Securities and Exchange Board of India (Sebi) has proposed to make it mandatory for mutual fund houses to give separate disclosures for direct plan and regular plan schemes in their half-yearly financial results.

So far, the disclosures are only for regular plans. The reports include details like expenses, returns and yields of the schemes.

Currently, asset management companies (AMCs) only disclose this information for regular plans, but since direct plans have different expense ratios and returns, Sebi believes it's essential to provide them separately. This increased transparency will help investors understand the impact of fees on their investments.

“Considering that the expenses, expense ratio, returns and yields for direct plans and regular plans are different, it is proposed that such disclosures pertaining to both direct plan and regular plan may be disclosed in a standard format,” Sebi stated in a consultation paper.

In addition, the regulator plans to bring in colour coded risk-o-meter. Low risk would be denoted by green and high risk by red. At present, risk-o-meters are in black and white.

“To further enhance the pictorial representation of risk, it is proposed that the risk-o-meter should be colour coded. It is also proposed to standardise the format for disclosure of change in risk-o-meters of a mutual fund scheme as well as its benchmark,” the regulator said.