Colour code for Mutual Fund

We often see the mis-selling of the financial products. Mis selling is a common thing in the financial industry that happens to almost everybody's life. To control mis-selling in mutual fund, SEBI has issued guideline for colour coding of mutual funds. The new guidelines to be effective from July 1, 2013, for all existing and forthcoming mutual fund products. Now onwards, product labels with scheme detail would be disclosed on common application form and advertisements. The labels would also include detail about the nature of schemes such as to create wealth or provide regular income in an indicative time horizon (short/ medium / long term)

There is also colour code for displaying the product risk. A blue colour coded box would indicate low risk, yellow box would indicate a medium risk, while brown box would be represent schemes with high risk. As per the guidelines, mutual funds would also have to include a disclaimer that "investors should consult their financial advisers if they are not clear about the suitability of the product".

These new colour code would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them.

For more detail about any other query related investment, you can contact me through my email.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Twitter id : @trivedi_arvind