A mutual fund need not declare NAV after each business day!

Published: June 7, 2019 at 10:54 am

Yes, that is right! There is no legal obligation for a mutual fund to declare NAV after each business day! SEBI expects them to, yes but the rules are fairly lax in this regard. Let us take a look at what happened after the DHFL crisis.

NAV for 3rd June 2019: According to AMFI, For 3rd June 2019, 10164 schemes declared NAV. Out of these 10043 declared it on 3rd June, 113 of them declared it on 4th June before 10 am (they could be a fund of funds see below), 4 of them after 10 am and 4 of them on 6th June! Remember this is the NAV for 3rd June. Also by a scheme, I do not refer to individual funds. Those 4 schemes could be from the same fund (regular growth, regular dividend, direct growth, etc).

NAV for 4th June 2019: For 4th June  10072 schemes declared NAV. Out o these 9530 declared it on the 4th, 415 before 10 am on the 5th, 119 after 10 am on 5th and 8 schemes on the 6th.

Notice that 92 schemes have still not declared NAV for 4th June!!  (as on 9: 30 am 7th June 2019). Clearly, there is no obligation for mutual funds to declare NAV after each business day (and even if they do so, on time)

What are the SEBI rules regarding NAV disclosure?

Refer to page 98 of the SEBI Master circular for mutual funds (read this if you want to know any rules)

NAV of all Mutual Fund schemes except for Fund of Fund Schemes shall be updated on AMFI’s website and the Mutual Funds’ websites by 9 p.m. of the same day (Fund of funds have time until 10 am the next day)

Now, this might seem strict, but hang on:

Delay beyond 10 a.m. of the following business day in case of Fund of Fund schemes and 9 p.m. on the same day for all other schemes shall be explained in writing to AMFI and the Board and shall also be reported in the CTR(s) in terms of number of days of non adherence of time limit for uploading NAV on AMFI’s website and the reasons for the same. Corrective steps taken by AMC to reduce the number of occurrences shall also be disclosed (CTR = compliance test report)

 

In case the NAVs are not available before the commencement of business hours on the following day due to any reason, Mutual Funds shall issue a press release giving reasons for the delay and explain when they would be able to publish the NAVs

So if they do not declare NAV in time, they will have to file a report and that is it! Nice! So there is no legal obligation to declare NAV after each business day and to declare it on time too (check the no of schemes that declared post 10 am!). Have any reports been filed? Will we ever know the real reasons? Are you watching dear SEBI?

Due to DHFL crisis, there were informal reports of non-declaration of NAV

non-declaration of NAV

Thanks to Anish Mohan who pointed out that Franklin India Corporate Debt and Franklin India Short Term Income Fund have not yet declared NAV for 5th June. Update: Thanks to Anuraag Saboo for pointing out (see comment below) 5th is a holiday.

 

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