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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 the AMFI Code of Conduct and SEBI advertisement norms?

The permissible practice is stating that past performance may or may not be sustained in future. Mutual fund advertising must be fair and carry risk disclosures, so guaranteeing returns, claiming greater safety than bank deposits, or dropping disclaimers would be misleading and breach the code.

  1. AGuaranteeing a minimum return to attract investors
  2. BStating that past performance may or may not be sustained in the futureCorrect
  3. CComparing the scheme with a bank deposit and promising higher safety
  4. DOmitting the risk-factor disclaimer to keep the message short

Explanation

Advertisements must carry fair disclosures, including that past performance may or may not be sustained. Guaranteeing returns, claiming superior safety over deposits and omitting risk disclaimers are misleading and not permitted.

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