The Securities and Exchange Board of India (SEBI) has eased the timeline for the disclosure of net asset value (NAV) of mutual fund schemes investing in overseas markets.
An NAV represents the value of a unit in the scheme and is the main performance indicator for a mutual fund.
Mutual funds are mandated to disclose the NAVs of all schemes within a given outer time limit.
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“However, to address the difficulties being faced in the calculation of NAV for schemes investing overseas due to differences in time zones and market hours, partial modification with regard to timelines for declaration of NAV is prescribed depending on investment objective and asset allocation of schemes,” the capital markets regulator said in a circular on March 29.
With regards to schemes investing at least 80 percent of total assets in permissible overseas investments, the new timeline has been changed to 10 AM (IST) on T+1 day, a shorthand for "trade date plus one day".
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The existing timeline for this category of funds was 11 PM on Trade day.
The markets regulator has given similar leeway to index funds and Exchange-Traded Funds (ETFs) investing at least 80 percent of total assets in permissible overseas investments.
On the other hand, the timeline for disclosing NAVs for schemes having exposure to Exchange Traded Commodity Derivatives (ETCDs) will remain at 9 AM on T+1 day.
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Further, for Fund of Funds (FoFs) schemes the timeline is unchanged at 10 AM on T+1 day.
However, for schemes unable to disclose NAV as per the timeline mentioned above due to the inability in capturing same-day valuation of underlying investments, SEBI had changed the timeline to “such time as per disclosure made in Scheme Information Document (SID) along with reasons for such delayed disclosure.”
The current timeline for this category was 11 PM on T day or 10 AM on T+1 day.
Apart from this, for all schemes other than those mentioned above, the timeline has remained at 11 PM on T day.
“While complying with the new timelines for declaration of NAV, AMCs as a principle shall ensure that NAV of schemes is disclosed based on the value of underlying securities/ Funds as on the T day (i.e. date of investment in MF units in India),” SEBI said in the circular.
The provisions of this circular will come into force from July 1, 2023.
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