- Date : 09/03/2023
- Read: 2 mins
SEBI is unhappy with the advertisements that show assumption-based future returns.
SEBI found brochures and pamphlets that some mutual funds have distributed, giving an impression of SIP and SWP-related assured returns. The Securities and Exchange Board of India (SEBI) is the regulator of the capital markets and has asked Mutual Funds to stop promising assured returns to investors. It sent a letter to the AMFI (Association of Mutual Funds of India) on March 3 to remind it to stick to the ad code under the MF regulations set by the SEBI.
SEBI stated that it found instances where MFs circulated misleading brochures and pamphlets by telling investors that they could receive fixed amounts of money by investing in SIP and SWP combinations.
Systematic Investment Plans (SIP) & Systematic Withdrawal Plans (SWP)
A systematic withdrawal plan (SWP) allows you to withdraw money monthly, and a systematic investment plan (SIP) allows you to invest some money monthly. The law does not permit mutual funds to assure returns. However, SWPs are popular for receiving returns. It is especially popular among retirees.
Giving an impression or promising returns is another matter. However, the problem arises as the exchange board comes across illustrations that give an impression of (assured) returns. Mutual Funds cannot assure returns according to the MF regulations set by the SEBI. Promising returns do not make sense as the MFs invest in debt and equity markets subject to changing NAVs.
SEBI is also unhappy with the advertisements that show assumption-based future returns. It said that MFs are advised to tell all AMCs to stop indulging in these practices, remove these brochures, presentations, pamphlets, and ads from all mediums, and never use them again.