Mutual funds: Sebi makes offer documents simpler and exhaustive; details here

In order to enhance ease of preparation of the scheme information document by mutual funds and increase its readability for investors, the watchdog has undertaken an exercise to revamp the SID’s format.

Changes to be introduced

These are the changes set to be introduced in mutual fund schemes’ Scheme Information Documents i.e., SIDs:

1. Portfolio holdings: The scheme’s portfolio holdings (top 10 holdings by issuer and fund allocation towards various sectors) will be disclosed by way of a functional web link where the said data will be hosted.

2. Investment by fund manager: Disclosures need to be made with regards to the aggregate investment in the scheme by fund manager under these categories:

A. AMC’s board of directors

B. Other key personnel

3. Segregated portfolio: Creation of segregated portfolio will be optional and it should be created only if the SID of the scheme has enabling provision for segregated portfolio with detailed disclosures made in statement of additional information (SAI).

All new schemes will have the enabling provision included in the SID for creation of segregated portfolio.

4. Details disclosures: There will be provision disclosed by the AMC in SID with detailed disclosures made in statement of additional information (SAI).

5. Risk factor: Risk-o-meter of the benchmark will be disclosed on the front page of initial offering application form, SID, KIM (Key Information Memorandum) and common application form.

Timelines to be followed

The draft SIDs are to be filed before March 31 next year; the SIDs already filed with Sebi can continue to use the old format of SID.

The updated format for SID will be implemented with effect from April 1, 2024.

In case of existing SIDs, amendments need to be made by April 30 next year with data as on March 31, 2024.

Besides, in line with the new SID format, AMFI will carry out the necessary changes in the formats of KIM and SAI in consultation with Sebi within two months from the date of this circular.

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Updated: 02 Nov 2023, 06:31 PM IST