Sebi puts stop on indicative yields of MFs

Days of indicative yields or indicative portfolios of mutual funds have come to an end. Sebi in its directive has put a stop on this. Also, all liquid plus schemes too will have to change their nomenclature.



Sebi has issued a circular asking all AMCs to stop using indicative portfolios on their debt of fixed income funds. They will now be discontinued as per a directive by market regulator, Securities and Exchange Board of India (Sebi). The regulator feels indicative yields are misleading for investors as they have yields as high as 11–12% yields.



Securities maturity duration have also been reduced. Investments in money market securities will be allowed up to 182 days maturity with effect from February 1, 2009. Investments in money market securities will later be allowed only up to 91 days with effect from May 1, 2009.



There also reports the move has been taken after the October-November liquidity crunch leading to redemptions.