SECP rationalises advertisement requirements for equity funds

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has specified certain requirements for the advertisements of equity funds to improve the quality of information related to the performance of the mutual funds and to promote better investment decisions, a statement issued by the commission said on Thursday.

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 favorable information on the fund’s performance and not presenting the complete risk profile, comparisons to benchmark, and important disclaimers can be misconstrued by potential investors, it said.

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, to improve the legibility of risk profiles and disclaimers, the text format has also been specified. These conditions form the 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, it added.