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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

A distributor wants to advertise a mutual fund scheme to prospective investors. Which practice is consistent with SEBI and AMFI advertisement guidelines?

Advertisements must include the standard disclaimer that mutual fund investments are subject to market risks and that past performance may not be sustained. Guaranteeing returns, promising capital safety or making unsupported superiority claims is misleading and violates SEBI and AMFI advertisement norms.

  1. AGuaranteeing a minimum return of 12% per annum on an equity scheme
  2. BIncluding the standard risk disclaimer that mutual fund investments are subject to market risks and past performance may not be sustainedCorrect
  3. CStating that the scheme is better than all competing schemes without any basis
  4. DPromising that the investor will never lose capital

Explanation

Advertisements must be fair, not misleading, and carry the standard disclaimer on market risks and past performance. Guaranteeing returns, claiming safety of capital or unsupported superiority claims are prohibited.

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