Mutual funds need to separately disclose expenses, half-yearly returns for direct and regular Plans says SEBI

Securities and Exchange Board of India (SEBI) has stated that as distribution expenses and commission cannot be charged to investors of a direct plan, the expense ratio of direct plan of any scheme is lower than that of the regular plan of the same scheme and hence the returns of the direct and regular plans also differ. Disclosure of expenses should now contain separate disclosures for total recurring expenses for direct and regular plans, apart from the disclosure of total recurring expenses of the scheme. (SEBI) has introduced separate disclosure requirements for expenses, half-yearly returns, annualised yields in direct and regular mutual fund (MF) plans, and a colour-coded system for the existing risk-o-meter. These new requirements, aimed to improve investor protection and clarity around MF disclosures, will be implemented from 5 December 2024, SEBI says. To standardise the above disclosures, the format for half -yearly financial statement for MF schemes shall be reviewed and finalised by AMFI, in consultation with SEBI. For all other regulatory disclosures where expenses, expense ratio, returns and/or yield of the schemes are required to be disclosed, separate disclosures shall be made for both reg ular and direct plans.

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