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regular-article-logo Friday, 23 February 2024

New Sebi benchmark guidelines for Mutual Funds

New framework, aimed at helping investors in assessing performance of portfolio managers, would be applicable from April 1

PTI New Delhi Published 17.12.22, 01:46 AM

Sebi on Friday came out with performance reporting guidelines for portfolio managers, which will clearly distinguish categories of products and bring more transparency for clients by selecting appropriate benchmarks.

Reviewing the requirements related to performance reporting and benchmarking by portfolio managers, the regulator has asked them to adopt an additional layer of broadly defined investment “strategies” while managing the clients’ funds.

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This is in addition to the investment approach (IA) —the documented investment philosophy — adopted by portfolio managers while managing the client funds in order to achieve investment objectives.

The new framework, aimed at helping investors in assessing the performance of portfolio managers, would be applicable from April 1.

“In addition to the investment approach IA, an additional layer of broadly defined investment themes called ‘strategies’ shall be adopted by portfolio managers,” the Securities and Exchange Board of India (Sebi) said in a circular.

These broad strategies would be equity, debt, hybrid and multi-asset.

“This is a great move by Sebi to create clear distinct categories of products and more transparency for clients by selecting appropriate benchmarks. This helps in reflecting the true performance of the strategy,” said Siddharth Vora — head of investment strategy and fund manager — PMS, Prabhudas Lilladher.

Clearing corps

Sebi on Friday put in place a framework for orderly winding down of critical operations and services of clearing corporations (CCs).

Under the framework, CCswill have to draw up a Standard Operating Procedure(SOP) outlining the manner in which their critical services would be carried out in an orderly manner so as to not cause any disruption to the financial system, upon triggering of any voluntary or involuntary winding down of operations.

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