Sebi picks holes in SBI Mutual's commodity fund

Question is being raised over its being hawked as commodity fund instead of equity fund

The Securities and Exchange Board of India (Sebi) has asked SBI Mutual Fund to explain why its newly launched commodities sector fund SBI Comma Fund is being advertised as a commodities fund rather than an equity sector fund.

Sebi feels the mutual fund's advertising campaigns bring out the commodities nature of the product without enough reference to the fact that it was primarily an equity fund.

The Magnum Comma Fund is the first of its kind. Comma is an acronym for commodities in oil, metals, materials and agriculture. The investment objective of the fund is to provide consistent returns by investing predominantly in a portfolio of stocks of companies engaged in the commodity business within the above mentioned sectors. The fund was launched on June 30, 2005 and the offer is open for subscription till July 25.

Sebi has been hitting at mutual funds for mis-selling products. Lack of investor awareness about mutual funds, mis-leading advertising campaign and mis-selling by distributors, has been creating confusion in the minds of investors.

Recently, Sebi directed mutual funds to stop calling the newly launched funds as initial public offer as investors tend to get misguided, little knowing that fund IPOs are vastly different from mutual funds new offerings. Open-ended mutual funds are available on tap and can be bought and redeemed at the day's net asset value.