NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework
A mutual fund distributor wants to advertise a scheme's past performance. Which approach is consistent with SEBI/AMFI advertisement and conduct norms?
Performance should be shown in the prescribed standard format with the disclaimer that past performance may or may not be sustained. Selective periods, promised repeat returns or guarantees of beating bank deposits are misleading and breach advertisement norms.
- AShow only the best-performing year and omit other periods
- BPromise that the past returns will be repeated in future
- CPresent performance as per prescribed standardised formats along with the statement that past performance may or may not be sustainedCorrect
- DDescribe the scheme as guaranteed to give returns higher than bank deposits
Explanation
Advertisements must be fair, not misleading, and must carry the disclaimer that past performance may or may not be sustained in future. Cherry-picking periods, promising returns or implying guarantees violates the code of conduct for advertisements.
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