Mutual Fund Unlocked: Advertisement of Mutual Fund Schemes

When it comes to insurance products there is MS Dhoni who is a brand ambassador of Exide Life Insurance, recently Sachin Tendulkar partnered with IDBI Federal Life Insurance as a brand ambassador, but we don’t see any such celebrities endorsing mutual funds. This is because AMCs are not allowed to do so.

When compared to other financial products, the advertisement guidelines for mutual funds are more comprehensive in nature. The Clause C of SEBI circular dated August 22, 2011, which reviewed via SEBI circular dated March 15, 2017, gives more transparency when it comes to the advertisement of performance-related information of a mutual fund product.

In Clause B of SEBI circular dated March 15, 2017, have provided guidelines regarding celebrity endorsements of mutual funds. Wherein, SEBI first time ever have allowed celebrity endorsements but is restricted only at industry level to increase the awareness of mutual funds as a financial product. However, there are certain terms and conditions attached to it. As per SEBI, celebrities must not promote any particular mutual fund product or scheme.

The reason behind this guideline is that mutual fund schemes are market-linked products. So there cannot be any visual representation or any guarantee of their performance. SEBI also came with guidelines on expenditures towards these industry level endorsements. SEBI circular states that, “Expenses towards such celebrity endorsements for increasing awareness of Mutual Funds shall be limited to the amounts that are aggregated by Mutual Funds at industry level for the purpose of conducting investor education and awareness initiatives, in terms of clause F of SEBI circular dated September 13, 2012 and prior approval of SEBI shall be required for issuance of any endorsement of Mutual Funds as a financial product, which features a celebrity for the purpose of increasing awareness of Mutual Funds.”