SEBI makes mutual fund fees, issue norms more customer-friendly
30 Jul 2010
The Securities and Exchange Board of India (SEBI) has issued revised regulations to mutual funds prescribing limits to issue and subscription period, total expenses of schemes, including redemption expenses, investment management and advisory fees etc.
SEBI on Thursday notified further changes to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 by notifying the SEBI (Mutual Funds) (Amendment) Regulation 2010. The new regulations would come into force with immediate effect.
Accordingly, a scheme should be open for subscription for "15 days" instead of the 45 days as prescribed under Regulation 34 earlier, while refund of money would be made within "five working days" against the "six weeks" prescribed in Regulation 35, earlier.
The asset management company or mutual fund house should issue the applicant whose application has been accepted with a statement of the number of units allocated within "five working days" instead of the "thirty days" as prescribed earlier under Regulation 36.
Total expenses of a scheme, including management fees, should either not exceed 0.75 per cent of the daily or weekly average net assets, depending upon whether the NAV of the scheme is calculated on daily or weekly basis, in the case of a fund of funds scheme.
Alternatively, it may consist of management fees for the scheme not exceeding 0.75 per cent of the daily or weekly average net assets depending upon whether the NAV of the scheme is calculated on daily or weekly basis; other expenses relating to administration of the scheme; and charges levied by the underlying schemes, provided that the sum total of the first two and the weighted average of the total expense ratio of the underlying schemes do not exceed 2.50 per cent of the daily or weekly average net assets (depending upon whether the NAV of the scheme is calculated on daily or weekly basis).
In the case of an index fund scheme or exchange traded fund, the total expenses of the scheme, including the investment and advisory fees should not exceed one and a half per cent (1.5 per cent) of the weekly average net assets.
In case of any other scheme, it would be 2.5 per cent of the daily or average weekly net assets on the first Rs100 crore; 2.25 per cent on the next Rs300 crore of the daily or average weekly net assets; 2.0 per cent on the next Rs300 crore of the daily or average weekly net assets; and 1.75 per cent on the balance of the assets, provided that in respect of a scheme investing in bonds such recurring expenses are lesser by at least 0.25 per cent of the daily or weekly average net assets outstanding in each financial year.