SEBI Norms for Representing Returns
SEBI sets rules for how a scheme's performance is shown in disclosures and advertisements. This lesson covers the periods and method, the benchmarks shown alongside, the rules for young schemes and short-term debt funds, and what advertisements may not do.
Why the presentation is standardised
A return can be made to look very different by choosing the period, the method or the yardstick. SEBI's rules fix all three, so that performance figures are shown the same way from one scheme and fund house to the next.
The rules apply to performance disclosures and to advertisements. They say what has to be shown, what a young scheme may show, and what may not be said at all.
What has to be shown
Performance is shown as CAGR for 1, 3 and 5 years and since inception, together with the point-to-point return on ₹10,000, which is what ₹10,000 invested at the start of the period would be worth at the end.
The scheme is shown against the Total Return Index of its benchmark and against an additional benchmark. For equity schemes the additional benchmark is a broad equity index. For debt schemes with a duration or maturity of up to one year, and for arbitrage funds, it is the 1-year T-bill; for other debt schemes, conservative hybrid and equity savings funds it is the 10-year G-sec.
The riskometer accompanies the performance figures, the plan (regular or direct) is stated, and the performance of the fund manager's other schemes is disclosed.
Young schemes and short-term debt funds
A scheme under 6 months old shows no performance at all; scaling a few months' return up to a yearly figure is not permitted for it. A scheme that is 6 to 12 months old shows simple annualised growth, not CAGR.
Overnight, liquid and money-market funds may show simple annualised yields for 7, 15 and 30 days.
What may not be said
Advertisements may not use celebrities, testimonials or rankings, and may not offer an indicative yield or return.
Performance figures carry the caution that past performance may or may not be sustained in future and is not a guarantee. No fund house or regulator assures or guarantees a mutual fund's returns.
Rules at a glance
Three schemes, three rules (illustrative)
A fund house prepares an advertisement covering three of its equity schemes. The first was launched 4 months ago, so no performance figure is shown for it.
The second is 9 months old, so it shows simple annualised growth. The third has run for 6 years, so it shows CAGR for 1, 3 and 5 years and since inception, with the point-to-point return on ₹10,000, against its benchmark's Total Return Index and a broad equity index.
The figures behind a performance table (illustrative)
- Assumed figures, for arithmetic only. A scheme's 1-year return is 12%. Value of ₹10,000 after one year = ₹10,000 × 1.12 = ₹11,200.
- The same scheme's 3-year CAGR is 20%. Value of ₹10,000 after three years = ₹10,000 × 1.20 × 1.20 × 1.20 = ₹17,280.
- Simple annualised growth: a return of 5% over six months is scaled to a year without compounding: 5% × 12 ÷ 6 = 10%.
- Simple annualised yield: a liquid fund's NAV rises 0.12% in 7 days. Scaled to a year: 0.12% × 365 ÷ 7 = 6.26%.
Result. ₹10,000 becomes ₹11,200 at 12% for one year and ₹17,280 at a CAGR of 20% for three years; simple annualising turns 5% in six months into 10%, and 0.12% in 7 days into 6.26%.
Key points
- Performance is shown as CAGR for 1, 3 and 5 years and since inception, plus the point-to-point return on ₹10,000.
- A scheme 6 to 12 months old shows simple annualised growth; a scheme under 6 months old shows no performance.
- Performance is compared with the benchmark's Total Return Index and with an additional benchmark.
- The riskometer accompanies performance, the plan is stated, and the fund manager's other schemes are disclosed.
- Advertisements may not use celebrities, testimonials or rankings, or offer an indicative yield or return.
Common misunderstandings
- A scheme under 6 months old does not show an annualised return: it shows no performance at all.
- A performance table is not a promise: past performance may or may not be sustained in future and is not a guarantee.
- Rankings against other schemes are not allowed in advertisements, nor are celebrities or testimonials.
Questions people ask
What is the additional benchmark for?
It is a second, standard yardstick shown beside the scheme's own benchmark: a broad equity index for equity schemes, the 1-year T-bill or 10-year G-sec for debt schemes.
Do regular and direct plans share one performance figure?
No. Regular and direct plans have separate NAVs and different expense ratios, so their returns differ; the plan whose performance is shown has to be stated.
May an advertisement indicate the return an investor can expect?
No. No indicative yield or return may be offered.
What this lesson relies on
- SEBI Master Circular for Mutual Funds, 20 March 2026 — performance disclosure, advertisements, benchmarks and riskometer
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.