MF update: More disclosure norms to govern new schemes post-merger

Market regulator SEBI (Securities and Exchange Board of India) has tightened norms for the disclosure of the performance track record of the merged schemes. The move aims to standardize the performance disclosure of the schemes.

Currently, owing to lack of proper guidelines some of the fund houses use weighted average of the performance of the schemes involved in the merged scheme. Whereas other show performance of the survived scheme only. Therefore, the market regulator has guided the fund houses that weighted average of the two schemes can be used only if both of the schemes have a similar feature.

Further according to the circular, effective from May 1, 2018, the track record of the performance of the scheme whose features are retained in the surviving schemes are expected to be disclosed if the merged schemes are different. Also, no track for performance is expected to be provided if previous feature of the schemes are not retained in the newly merged scheme. This would also be applicable to the mergers where the fundamental attributes of the survived schemes are different from the parent schemes. Additionally, the past performance record of the schemes, whose features are not retained post-merger, should also be made available on request with adequate disclaimer.