ISLAMABAD: In order improve quality of information related to performance of mutual funds to promote better investment decisions, the Securities and Exchange Commission of Pakistan (SECP) has specified certain requirements for the advertisements of equity funds.
The requirements have been issued to curb the problem of misselling through advertisements being circulated on social media, especially concerning equity-oriented mutual funds. Advertisements only projecting favourable information on fund’s performance and not presenting the complete risk profile, comparisons to benchmark, and important disclaimers can lead may be misconstrued by potential investors.
The SECP, vide Circular No 16 of 2021, has specified certain conditions for the advertisement of equity funds, requiring the fund’s projected performance/return to be based on a minimum period of 12 calendar months on a rolling basis.
Moreover, in order to improve the legibility of risk profiles and disclaimers, the text format has also been specified. These conditions form part of the SECP’s policy to raise the bar on AMCs fiduciary responsibility, by encouraging a true and fair view of the fund’s performance to attract investment.
