SEBI weighs entry fee waiver for direct investment in mutual funds
22 Aug 2007
Mumbai: The Securities and Exchange Board of India (SEBI) is considering a waiver of the entry load for direct applications received by asset management companies.
Most equity mutual funds charge about 2.25 per cent entry load on one-time investments made directly or through distributors.
Investors are thus charged for the privilege of investing in the scheme (irrespective of the returns). This entry load is generally not utilised in any way for the investors' direct benefit.
As per general industry practice it normally goes towards paying the brokerage / commission of the distributor through whom the application was routed to the AMC.
But, currently, all investors irrespective of the mode of entry are required to pay the entry load. Even if an investor approaches the fund house directly or invests via the internet without availing the services of a distributor, he is charged an entry load.
SEBI has taken notice of this practice and in the interest of the investors, is considering a waiver in the entry load for `Direct Investments'.
SEBI has asked for comments from interested people on the subject matter to enable them to take a final decision.
Interested people may send in their comments on this issue to ruchic@sebi.gov.in or by writing a letter addressed to SEBI, Investment Management Department, SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051 on or before 12 September 2007.
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