Friday, January 18, 2008


AMFI standardises fund fact sheet formats

Have you noticed how mutual fund (MF) fact sheets differ from fund house to fund house? While Sundaram BNP Paribas MF always profiles its fund managers in its fact sheet, most others just mention their names while funds like Birla MF carries just their names on their last pages without saying who manages which fund. Few MFs like Templeton disclose key risk-return ratios, while most others avoid. How detailed scheme objectives are explained also differs from MF to MF.

In a move to standardise the information that you get to read in a fund fact sheet so that fair comparisons can be carried out, the Association of Mutual Funds of India (Amfi) has now recommended a standard format for fact sheets.

What’s new?
Amfi recommends that apart from the basic information like a scheme’s name, its objective, and type, all MFs must also disclose the names and experiences of fund managers. Apart from expense ratios, you will now get to see how much your new fund offer charged as initial issue expenses and how much of that is amortised. As the Indian MF industry is evolving and investor awareness on a rise, Amfi has also recommended that MFs disclose key financial ratios like Sharpe, standard deviation, beta, portfolio turnover ratios for equity funds and modified duration and average maturity for debt funds. These ratios help a better comparision between schemes on volatility and risk adjusted return basis.

What’s the catch?
While Amfi’s intention is well-placed, it is not binding on MFs as Amfi is merely an association of MFs and not a regulator. For it to become a law, Sebi needs to impose this guideline. It remains to be seen which MFs adhere to these best practices and which don’t. I’ll keep you posted.

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