Securities & Exchange Board of India (Sebi) is looking to have a variable load structure for mutual fund distributors. The commission in the variable load structure regime, as proposed by the Association of Mutual Funds in India (Amfi) board, would depend on the quality and nature of service and advice given to an investor.
Speaking to reporters after the one day seminar ‘ICC Mutual Fund Summit 2008’ organised by the Indian Chamber of Commerce here on Saturday, Sebi executive director R K Nair said: “In global markets, investors have a choice. They have different load for different services. We too are working towards it.”
Incidentally, entry load is a charge levied on investors by a mutual fund in case an investor decides to invest in the scheme. Open ended mutual fund schemes charge anything between 2 % and 2.5% of the amount invested under different heads like marketing cost and distribution commission.
Elaborating further, Amfi chairman A P Kurian said, the commission paid to distributors is not linked to the quality or extent of service as well as the nature or quality of advice.
“In case Sebi clears the proposal, distributors along with the investor can jointly work out their commission depending on the quality of service or the nature of advice. The rate will largely depend on the extent of service and advice gven to the investor and will find mention in the investor’s application form,” he added.'
“Since the variable load factor regime is a common practice in developed markets, Indian mutual fund industry should also strive towards this,” Mr Kurian said.
This apart, Amfi is also working to have a structured common application format for all mutual fund schemes across the country instead of having different application forms from different mutual fund houses. The association is yet to take up the issue with Sebi.
Speaking to reporters after the one day seminar ‘ICC Mutual Fund Summit 2008’ organised by the Indian Chamber of Commerce here on Saturday, Sebi executive director R K Nair said: “In global markets, investors have a choice. They have different load for different services. We too are working towards it.”
Incidentally, entry load is a charge levied on investors by a mutual fund in case an investor decides to invest in the scheme. Open ended mutual fund schemes charge anything between 2 % and 2.5% of the amount invested under different heads like marketing cost and distribution commission.
Elaborating further, Amfi chairman A P Kurian said, the commission paid to distributors is not linked to the quality or extent of service as well as the nature or quality of advice.
“In case Sebi clears the proposal, distributors along with the investor can jointly work out their commission depending on the quality of service or the nature of advice. The rate will largely depend on the extent of service and advice gven to the investor and will find mention in the investor’s application form,” he added.'
“Since the variable load factor regime is a common practice in developed markets, Indian mutual fund industry should also strive towards this,” Mr Kurian said.
This apart, Amfi is also working to have a structured common application format for all mutual fund schemes across the country instead of having different application forms from different mutual fund houses. The association is yet to take up the issue with Sebi.
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