SEBI turns down AMFI’s request to do away with daily AUM disclosure; changes formula for B30 trail commission

The Securities and Exchange Board of India (SEBI) has said that mutual funds will have to disclose assets under management of their schemes on a daily basis, coupled with an additional benchmark and product labelling.

In a clarification letter to the Association of Mutual Funds India (AMFI) on March 7, the market regulator said, “The AUM of all schemes except liquid schemes has to be disclosed on daily basis on AMFI website.”

Moneycontrol has access to a copy of the letter.

AMFI had earlier requested SEBI to do away with the requirement of publishing the daily AUM of mutual schemes.

SEBI said that in case of liquid schemes the closing AUM, and the AUM of the previous month has to be disclosed on the AMFI website on a daily basis.

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However, if the AUM movement of the schemes is over 10 percent from the previously disclosed AUM, fund houses will have to disclose the AUM of that day.

AMFI had asked to do away with the requirement to prevent unhealthy competition. Fund managers said that the disclosure of AUM on a daily basis may lead to unhealthy competition among fund houses for the shoring up of assets. Also, the extensive media glare on AUM figures may result in unnecessary pressure on funds.

At the same time, SEBI accepted AMFI’s request on the performance disclosure of short term schemes such as overnight fund, liquid fund, ultra-short duration fund, low duration fund, and money market funds. SEBI said that mutual fund houses will have to disclose the performance for a period of seven days, 15 days, one month, three months and six months.

SEBI also clarified that AMCs can disclose AUM of growth option of both regular and direct plans.

NEW FORMULA

In the same letter, SEBI said it has modified the formula of calculating the total expense ratio (TER) for beyond 30 (B30) cities.

TER is a percentage of a scheme's corpus that a mutual fund house charges towards expenses which including administrative and management expenses.

Earlier, only 'retail' assets were included in calculating the ratio. With the new formula, SEBI has allowed fund houses to consider both, retail and HNI assets while calculating the ratio.

The ratio at present is 30 bps of the total assets garnered.

Further, SEBI said that fund houses will have to follow the list issued by AMFI to look at T30 and B30 cities.