Mutual Fund Ads Restricted to Specific Returns, Amfi Informs AMCs

Amfi has released new guidelines to use only 10-year compounded annual rolling returns to ensure transparency in mutual fund advertisements
Mutual Funds,
Amfi, AMC
Mutual Funds, Advertisements, Amfi, AMC

The Association of Mutual Funds in India (Amfi) has introduced new guidelines for mutual fund advertisements and has asked asset management companies (AMCs) to use 10-year compounded annual rolling returns as the key metric for returns display.

This is to ensure clarity and accuracy in mutual fund advertisements and also curtail ongoing practices that often mislead investors. Some AMCs have been found violating the Advertisement Code under Sebi (Mutual Funds) Regulations, 1996.

In response, Amfi has issued a Best Practice Guideline (BPG) circular on November 1, 2023 aimed at providing conceptual clarity to investors in non-scheme related promotional materials. These guidelines are to be used for any “non-scheme related material”, i.e., reference material which does not contain any scheme related information.

What Are Illustrative Returns For Mutual Fund Ads?

Amfi mandates that mutual funds must display only the 10-year compounded annual rolling returns prescribed by it in non-scheme related pamphlets and advertisements.

For equity schemes, the returns that can be used for illustration are 12.64 per cent and 12.93 per cent, for schemes following Sensex and Nifty benchmark, respectively. This is Sensex and Nifty returns calculated by taking mean of 10-year rolling returns between June 1, 2013, and May 30, 2023.

The same method of calculation is used for all other funds. For fixed income funds following 10-year G-Sec as benchmark, the return allowed for illustration is 7.20 per cent. For hybrid funds with a 75 per cent equity allocation, it is 11.28 per cent for Sensex-benchmarked schemes, or 11.50 per cent for Nifty-benchmarked schemes.

For schemes with a 75 per cent debt allocation, the same would be 8.63 per cent and 8.56 per cent for Nifty and Sensex benchmarked schemes, respectively.

For schemes with an equal allocation to equity and debt, it is 9.92 per cent and 10.70 per cent, respectively. The Securities and Exchange Board of India (Sebi) plans to review the returns mentioned annually, based on benchmark movements.

To avoid any confusion, no future returns can be displayed, even on an illustrative basis. These numerical illustrations can only be used for the above specified categories prescribed by Sebi, and they should not indicate returns higher than those prescribed by Amfi.

The guidelines permit such numerical illustrations for systematic investment plan (SIP), systematic withdrawal plan (SWP), and systematic transfer plan (STP) calculators to explain the power of compounding. AMCs can use tools such as goal planning, SIP/STP/SWP calculators, which permit investors to select returns within a range from 2-13 per cent, to understand the compounding effect.

The font size used for disclaimers in advertisements should be consistent with other sections of the advertisement material.


Sebi had noted malpractices, such as illustrations in advertisements that had the potential to mislead investors into believing fixed returns in market investments, that investors would be receiving fixed returns for their investments including that of SIPs by demonstrating SWP as a multiple of SIP. Some ads depicted future returns based on assumptions and projections, with disclaimers often placed in fine print that could be missed by investors. These practices violate Amfi’s Advertisement Code guidelines.

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