Securities and Exchange Board of India, or SEBI, has standardised the disclosure norms pertaining to performance of schemes post-merger based on the recommendations of the Mutual Fund Advisory Committee.
Here’s how fund houses have to depict the performance of merged schemes under different scenarios:
- When two schemes, for example, Scheme A (Transferor Scheme) & Scheme B (Transferee Scheme), having similar features, get merged and the merged scheme i.e., surviving scheme also has the same features, the weighted average performance of both the schemes needs to be disclosed.
- When Scheme A (Transferor Scheme) gets merged into Scheme B (Transferee Scheme) and the features of Scheme B are retained, the performance of the scheme whose features are retained needs to be disclosed.
- When Scheme A (Transferor Scheme) gets merged into Scheme B (Transferee Scheme) and the features of Scheme A (Transferor scheme) are retained, the performance of the scheme whose features are retained needs to be disclosed.
- When Scheme A (Transferor Scheme) gets merged with Scheme B (Transferee Scheme) and a new scheme, Scheme C emerges after such consolidation or merger of schemes, the past performance need not be provided.
In addition to this, SEBI has said that past performance of schemes whose features are not retained post-merger will also have to be made available on request to investors with a disclaimer. The circular comes into effect from May 1, 2018.
