Amfi diktat on 10-yr rolling returns to curb mis-selling
Financial Express Mumbai|November 09, 2023
Industry for ramping up efforts towards educating investors
SIDDHANT MISHRA
  • SHOWING FUTURE RETURNS NOT PERMITTED

THE ASSOCIATION OF Mutual Funds in India's (AMFI) directive to fund houses regarding the use of projected returns in advertisements is a step in the right direction to curb mis-selling, say MF executives and distributors.

However, some say the efforts towards educating investors should be ramped up.

Reports last week said industry body AMFI has told fund houses they can only show 10-year rolling returns (compounded annually) while showcasing returns in their advertisements. They aren't permitted to show future returns, even as illustrations.

Rolling returns are described as the average of annual returns over a specific time frame. They help determine how the fund has performed over the specific holding period, and give a more accurate and transparent picture to the investor.

On the other hand, point-to point returns are specific to the period in consideration, and do not eliminate any recency bias.

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