Cut the cackle in the caveat, SEBI directs fund houses
"The remaining 20 percent space can be used for the name of the mutual fund or logo or name of the scheme, etc.," the market watchdog had said.
"The above statement shall be displayed in black letters of at least 8 inches height or covering 10 percent of the display area, on white background," it had said.
Though SEBI's directive has been welcomed, yet, many fund houses felt that overall advertising cost could go up by 15-20 percent if the time duration for the standard warning is stretched by another 3-4 seconds.
"While the move is in the investor's interest, we feel that there should be a level-playing field between banks, insurance companies and mutual funds. In a 10 second advertisement, if 5 seconds are for the disclaimer, then what will it communicate?" wondered Jaideep Bhattacharya, CMO, UTI Mutual Fund.
"Our costs would go up but this is something we will have to comply with," said Arindam Ghosh, CEO, Mirae Asset Management.
"An ad spot is usually for 20 to 25 seconds. If we had to increase the time by another three seconds to carry the caveat, the overall advertising cost could go up by at least 15 percent," said an official with a leading mutual fund company.
"Although this is an excellent move by the regulator from the investors' point of view, the decision is bound to hurt the profitability of asset management companies. Instead of making changes at the superficial level, the regulator should direct changes at the investment level," the official said.
A marketing head of another fund house complained that SEBI's order made fund houses uncompetitive compared to insurance companies.
"Insurance companies use the caveat 'Insurance is a subject matter of solicitation' to market insurance products that also include unit-linked insurance plans," the official said.
"There are no rules mandated by the Insurance Regulatory and Development Authority (IRDA) on its duration. Even the Hindi version of the line that insurers use is short," he added.
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