Sebi Mandates Daily Transparency in Mutual Fund Disclosures

Sebi has directed mutual funds to disclose the information ratio for equity-oriented schemes to improve transparency and decision-making. This metric measures the risk-adjusted return of a portfolio. Amfi will ensure comparability of data, and uniform methodology will apply across all mutual funds within three months.

The Securities and Exchange Board of India (Sebi) has issued new directives aimed at boosting transparency in the mutual fund sector. The regulatory body has mandated that mutual funds must disclose the information ratio (IR) of equity-oriented schemes alongside performance data.

The information ratio is a key financial metric that assesses the risk-adjusted return (RAR) of a portfolio, thereby providing insights into a portfolio manager's capability to achieve returns beyond a set benchmark. It also evaluates the consistency of a portfolio's performance by taking into account standard deviation and risk factors.

Sebi's circular stipulates that mutual funds make these IR disclosures daily on their websites, and industry body Amfi is tasked with ensuring that this data is also accessible in a machine-readable format. The new rules will be implemented within three months, standardizing the reporting across different mutual fund categories.

(With inputs from agencies.)