SEBI has give up entry load on direct mutual fund applications from 4 January 2008. The entry load exempt for application is not routed via distributor, agent or broker. The exemption is for investments in existing & new schemes and also for additional buys by investor under same folio. The investor's switching-in to a scheme from other schemes will also get an exemption. Entry load is levied by a mutual fund when an investor invests in a scheme. Open-ended mutual fund schemes charge between 2- 2.5% of the amount invested as entry load to meet their marketing costs and distribution commissions. On the other hand, close-ended schemes are permitted to charge up to 6% as initial issue expenses that are amortized over the life of the scheme.
Waiver of entry load for direct applications
for Mutual Fund investments
Keeping in mind the interests of investors and to
facilitate the growth in Mutual Fund industry, with effect from January 04, 2008, investors making applications for investments in Mutual Fund schemes directly without routing through any distributor/agent/broker i.e. through internet, submitted to AMC or collection centre/ Investor Service Centre would not be subject to entry load. This waiver shall also apply to additional purchases done directly by the investor under the same folio and switch-in to a scheme from other schemes
if such a transaction is done directly by the investor.
The growth of mutual fund industry in the past years and the technology available for investments has enabled investors to take informed decisions and to invest in mutual funds through internet and other modes without availing of services of distributors/ agents/ brokers.
There was an overwhelming response in favour of the proposal by SEBI on waiver of entry load for
investors who do not route their mutual fund applications through a broker/
distributor.
The full text of the circular is available on the
website at www.sebi.gov.in
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