Sebi Proposes Enhanced Transparency in Mutual Fund Returns

Securities and Exchange Board of India (Sebi) has put forward a proposal for mandatory disclosure of 'risk-adjusted return' (RAR) along with mutual fund scheme returns. This move aims to help investors make more informed decisions. Currently, there is no standardized practice among Asset Management Companies (AMCs) for disclosing RAR.

The Securities and Exchange Board of India (Sebi) on Friday introduced a proposal for mandatory disclosure of 'risk-adjusted return' (RAR) alongside the returns of mutual fund schemes. The initiative aims to arm investors with crucial information to facilitate better investment decisions.

RAR of a scheme portfolio offers a more comprehensive measure of performance by quantifying the return generated for each unit of risk taken.

At present, the regulatory framework does not require RAR disclosure, and practices vary among asset management companies (AMCs). Sebi's proposal seeks to standardize this across all MFs, enhancing transparency and consistency in the mutual fund sector.

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