Mutual Fund Advertising and SEBI Disclosure Norms in India
Mutual fund advertising and disclosure norms in India are governed by SEBI’s Master Circular on Mutual Funds and the AMFI Best Practice Guidelines (BPG), which together prescribe what information must be included in all promotional materials, how past performance may be displayed, what risk disclosures are mandatory, and how digital and social media advertising must be handled. The framework has evolved significantly since the first SEBI advertising guidelines in 1994, culminating in a comprehensive regime that mandates the riskometer, standardised past performance presentation, and “Mutual Funds Sahi Hai” investor education branding.
The mandatory disclaimer
Every mutual fund advertisement in India must include the standard disclaimer:
“Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.”
This disclaimer – mandatory under AMFI Best Practice Guidelines – must appear in a readable font size and with sufficient prominence relative to the rest of the advertisement. In television and video advertisements, it must be read aloud with sufficient duration. In print advertisements, it must not be placed in a colour or font that renders it invisible.
The disclaimer is so widely recognised in Indian popular culture that it is commonly cited in everyday speech as an analogy for any speculative activity.
The riskometer
SEBI introduced a visual risk-labelling system for mutual fund schemes called the riskometer through a circular in 2015, updated to the current six-level format in 2020. The riskometer classifies schemes on a scale from Low to Very High risk:
| Level | Description | Typical scheme types |
|---|---|---|
| Low | Principal at low risk | Overnight, liquid, money market |
| Low to Moderate | Principal at low to moderate risk | Ultra-short, low-duration |
| Moderate | Principal at moderate risk | Short-duration, corporate bond |
| Moderately High | Principal at moderately high risk | Balanced, aggressive hybrid |
| High | Principal at high risk | Equity (large-cap, diversified) |
| Very High | Principal at very high risk | Small-cap, sectoral, thematic |
AMCs are required to display the riskometer in all scheme advertisements, factsheets, and SIDs. The riskometer must be computed on a prescribed methodology (based on portfolio characteristics) and reviewed monthly.
Past performance disclosure
SEBI and AMFI specify precise rules for how past performance may be presented in advertisements:
- Past performance data may only be presented in a standardised format showing 1-year, 3-year, 5-year, and “since inception” CAGR, alongside the benchmark return.
- The disclaimer “Past performance may or may not be sustained in the future” must accompany any past performance data.
- Point-to-point returns (cherry-picked dates showing excellent performance) are prohibited.
- Rolling returns or specific date-range returns may only be used if they cover standard periods.
- If a fund is promoted on the basis of its returns, the return of all schemes managed by the same fund manager must be disclosed, to prevent selective highlighting of one outperforming scheme.
Scheme Information Document and Key Information Memorandum
All mutual fund schemes are required to maintain:
Scheme Information Document (SID): The comprehensive offer document describing investment objective, strategy, benchmark, asset allocation, risks, fees, and all terms of the scheme. Must be filed with SEBI and published on the AMC’s website.
Key Information Memorandum (KIM): A condensed, standardised summary of the SID designed to be readable by investors. The KIM must be provided free of charge to any investor on request and must include the riskometer, expense ratio, minimum investment, and exit load.
Statement of Additional Information (SAI): Contains information common to all schemes of the fund house (trustee details, constitutional documents, tax treatment).
Digital and social media advertising
SEBI’s 2022 circular on finfluencer regulation and AMFI’s updated BPG addressed the growing influence of social media in mutual fund marketing:
- AMCs may not pay unregistered individuals (social media influencers, YouTubers) to promote specific mutual fund schemes.
- AMCs may engage content creators for financial literacy and investor education content, but such content must be clearly labelled as sponsored and must not constitute investment advice.
- AMCs’ own social media accounts must adhere to the same disclosure standards as print and television advertising.
- Registered Research Analysts and Investment Advisers who create financial content on social media must comply with SEBI’s applicable regulations.
Finfluencer regulation
SEBI’s 2023 circular defined “finfluencers” – individuals providing financial recommendations on digital platforms – as falling under the Investment Adviser or Research Analyst regulatory framework if they provide specific investment recommendations for consideration. Mutual fund AMCs were directed not to share data feeds, branding, or material benefits with unregistered finfluencers in connection with specific scheme promotions.
AMFI Advertising Code and review process
AMFI’s Advertising Code within the Best Practice Guidelines specifies:
- Advertisements must not mislead investors about expected returns.
- Comparisons with other financial products (bank FD, insurance) must be fair and disclose material differences.
- Guarantees or assurances of returns are prohibited.
- All advertisements must be reviewed by the AMC’s compliance team before publication.
- AMFI’s Advertising and Communications Committee reviews complaints about non-compliant advertisements.
Mutual Funds Sahi Hai: AMFI’s investor education campaign
AMFI’s Mutual Funds Sahi Hai campaign, funded through the investor education component of the Total Expense Ratio (TER), represents a distinct form of industry-level advertising – not promoting any specific AMC or scheme but promoting the mutual fund category as appropriate for retail investors. All AMC advertisements during the Sahi Hai campaign period were co-branded with the Sahi Hai tagline, creating a unified industry voice.