The market regulator Securities and Exchange Board of India, also known as SEBI, has put forward a new proposal that many believe would increase transparency and improve the performance of mutual funds and stock markets.

The new proposal would require asset management companies (AMCs) to disclose the track record of their fund managers while promoting or selling equity-oriented schemes. This would involve fund managers putting their records on all scheme-related documents, advertisements, promotions, as well as on the websites of SEBI, their own websites, and the website for the Association of Mutual Funds in India.

In keeping with many previous proposals made recently, the new move by Securities and Exchange Board of India is also believed to be seeking to improve protections for retail investors’ interest.

The Securities and Exchange Board of India justified the proposal by explaining that making these records public would enable investors to make informed decisions while investing in various mutual fund schemes.

It is also believed that making track records public will put more pressure on fund managers to ensure that various schemes live up to their promise of beating the benchmark indices in terms of returns.

As well, fund managers who have been eyeing short term gains will be forced to rethink their strategies to focus on good quality stocks from a long term perspective.