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No More Entry Load for Mutual Fund Investments - SEBI
June 18, 2009

In a press release following its board meeting today, the Securities and Exchange Board of India (SEBI) announced its decision to abolish entry loads for all mutual fund schemes, new and existing.


Author : Deepali Lalwani



Untitled Document

Titled “Transparency in payment of commission to Mutual Fund distributors”, SEBI has decided that, “There shall be no entry load for the schemes, existing or new, of a Mutual Fund. The upfront commission to distributors shall be paid by the investor to the distributor directly. The distributors shall disclose the commission, trail or otherwise, received by them for different schemes/ mutual funds which they are distributing or advising the investors.”

As we have already mentioned in our previous article on this issue, the basic premise behind this regulation is that retail investors have no control today over the charges they pay to the fund houses (and through them to the distributors). There are also practices like churning of client portfolios to earn entry load, and rebating that SEBI wants to reduce, making the relationship between investors and advisers more transparent and service-oriented.

In previous move in this direction, in January 2008, SEBI stated that investors investing directly with fund houses should be charged zero entry load.

 


iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 


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