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

In order to improve the ease of preparation of information documents of the scheme through mutual funds and to increase its readability for investors, the watchdog has carried out an exercise to reform the format of the SID.

Changes to be introduced

These are the changes to be introduced in the Scheme Information Documents of the mutual fund schemes ie. SIDs:

1. Portfolio holdings: The portfolio holdings of the scheme (top 10 holdings by issuer and allocation of funds to different sectors) will be disclosed through a functional web link where such data will be hosted.

2. Investment from a fund manager: A fund manager must disclose the aggregate investment in the scheme under these categories:

A. AMC board of directors

B. Other Key Personnel

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

The SID will include the enabling provision for all new schemes to create a segregated portfolio.

4. Disclosure of data: The AMC will disclose a provision in SID regarding detailed disclosures made in a statement of additional information (SAI).

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

Timelines to follow

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

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

For existing SIDs, amendments need to be made by 30 April next year with data as at 31 March 2024.

Further, in accordance with the new SID format, AMFI will make the necessary changes in KIM and SAI formats in consultation with Sebi within two months from the date of this circular.

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Updated: 02 November 2023, 06:31 PM IST

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