The Securities and Exchange Board of India (Sebi), on November 1, 2023, announced a new format of the Scheme Information Document (SID) of mutual fund schemes to facilitate better readability and transparency for investors, it said in a press release.
It has also suggested changes in the formats for the Key Information Memorandum and the Statement of Additional Information (SAI) of mutual funds.
Sebi said the SID format has been “simplified and rationalised” based on the suggestions from the Association of Mutual Funds of India (AMFI) and the Mutual Fund Advisory Committee AMFI. The revised format is expected to help disseminate the relevant information to investors easily while simplifying the SID’s periodic updation process by mutual funds.
Disclosure of Scheme Holdings: Mutual funds must now disclose scheme portfolio holdings through functional web links. The scheme’s portfolio holdings (top 10 holdings by issuer and fund allocation towards various sectors) shall be disclosed by way of a functional web link where the said data shall be hosted, the release said.
Investment by Fund Managers: Disclosure is required regarding the aggregate investment in the scheme by scheme fund managers and key personnel.
Creation of Segregated Portfolio: The creation of segregated portfolios is now optional and subject to the asset management company’s (AMC) discretion. AMCs must disclose provisions for a segregated portfolio in SIDs and Statement of Additional Information (SAI). Segregated portfolios can only be created if SID has enabling provisions to do so. It is usually created when an issuer of security fails to pay interest or sees a downgrade to below investment grade.
Risk-O-Meter Disclosure: AMCs are required to disclose the risk-o-meter of the Benchmark on the front page of the initial offering application form, SID, Key Information Memorandum (KIM) and Common application form.
The updated format for SID, KIM and SAI will be effective from April 1, 2024. Mutual funds are required to file draft SIDs with Sebi on or before March 31, 2024. For SIDs that have already been filed with Sebi and are set to be launched on or before March 31, 2024, the old SID format may be used, provided that these SIDs are updated by April 30, 2024. In line with the new SID format, the AMFI should collaborate with Sebi to implement necessary changes in the formats of KIM and SAI within two months from the issuance date of this circular.