X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
AMFI recommends steps to ensure more transparency - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 20, 1999

    AMFI recommends steps to ensure more transparency

    The Association of Mutual Funds of India (AMFI) has recommended that mutual funds (MFs) disclose their portfolios more frequently. This was reported by a leading financial daily.

    AMFI has recommended that MFs disclose 100% of their portfolios annually and 80% of their portfolios on a semi-annual basis. Currently, MFs disclose their portfolios annually in line with the Securities and Exchange Board of India (SEBI) guidelines.

    AMFI has also recommended that MFs disclose the non-performing assets (NPAs) and provide for them. AMFI has recommended that a debt instrument on which income is not received within a quarter of its due date should be treated as NPA.

    Demand for more frequent portfolio disclosures is a move in the right direction. Surprising as it may seem, there are a large number of MFs (mostly in the public sector) who refuse to disclose their portfolios more than once a year, and that too only because it is mandatory. But not all public MFs fall under this category. Some like State Bank of India (SBI) MF disclose their portfolios (of open-ended schemes) on a monthly basis, just like their private sector counterparts. Some others like Canara Bank disclose their portfolios on a quarterly basis.

    By and large, private MFs are more transparent and disclose their portfolios on a monthly basis. Some like DSP Merrill Lynch MF disclose portfolios on a quarterly basis.

    MFs must ensure greater transparency in their portfolios disclosures. Investors would like to know where there money is going, and they would like to see the duds and the stars in the portfolio. For instance, during the recent boom in software, pharma and consumer products, there is no way for a MF investor to know whether his MF has invested in these stocks, unless the MF reveals the portfolio frequently. This lack of information acts as a constraint, and does not allow the MF investor to make an investment decision. An annual portfolio disclosure is unthinkable in a mature MF market like the US, where portfolios are disclosed very frequently.

    A case in point is Morgan Stanley. When Morgan Stanley's portfolio was eroded in 1993 after the stock market scam, investors in the fund were caught in a jam. This is only because they had no idea about the number of duds (MS Shoes) in Morgan Stanley's portfolio. If discerning investors were aware of these stocks, they might have exited Morgan Stanley long before the scam.

    Even the NPA disclosure norms suggested by AMFI will improve the credibility of MFs. But like all other recommendations it remains to be seen how diligently it will be implemented. Some MFs with large NPAs in their books will no doubt oppose such a move, and as always the investor will be the loser.

     

     

    Equitymaster requests your view! Post a comment on "AMFI recommends steps to ensure more transparency". Click here!

      
     

    More Views on News

    The Right Financial Advisor Is Around the Corner (Outside View)

    Mar 10, 2016

    An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.

    Why financial planning should be dull and boring (Mutual Fund Corner)

    Feb 29, 2016

    Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.

    What Are E-Wallets And How To Use Them (Mutual Fund Corner)

    Feb 12, 2016

    PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.

    Is Consumption Boom Over In India? (Mutual Fund Corner)

    Feb 2, 2016

    Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.

    How to Find a Saint Amongst Sinners? (Mutual Fund Corner)

    Feb 1, 2016

    Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS