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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

Which of the following is a statement consistent with SEBI's regulations on mutual fund advertisements?

Mutual fund advertisements must be fair, not misleading, and must include the standard disclaimer that investments are subject to market risks and past performance is no guarantee of future results. Promising returns or omitting the risk statement breaches SEBI's advertisement code.

  1. AAdvertisements may guarantee past returns will continue
  2. BAdvertisements must not be misleading and should carry the standard risk disclaimerCorrect
  3. CAdvertisements need not mention that mutual fund investments are subject to market risks
  4. DAdvertisements may compare schemes without any disclosure

Explanation

Advertisements must be accurate, fair and not misleading, and must carry the prescribed disclaimer that mutual fund investments are subject to market risks and past performance does not guarantee future results. Guaranteeing returns or omitting the risk statement violates the code.

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