Domestic mutual funds returned empty handed from a meeting between them and Sebi on Tuesday. In the meeting called by SEBI chairman CB Bhave to receive feedback from mutual funds on its recent decisions on entry and exit loads, he is believed to have made it very clear that the industry will have to live with new norms.
According to fund officials, who attended the meeting, Mr Bhave patiently heard out the issues related to the new commission structure, but reiterated that the new steps will only be beneficial for the long-term growth of the industry.
He suggested that mutual funds need to be investor-centric and should have a uniform cost structure to avoid conflicts within the industry. Mr Bhave is believed to have told the officials that the period for charging exit loads should be one year for all mutual funds, capped at 1%, irrespective of the amount invested by any client.
While rules say that funds can charge unitholders up to 7% on exit, they were imposing this load on the basis of the quantum of investments. A fund official said: “In short, SEBI has hinted that mutual funds should compete on the basis of performance of its schemes and not on the commission structure.”
According to fund officials, who attended the meeting, Mr Bhave patiently heard out the issues related to the new commission structure, but reiterated that the new steps will only be beneficial for the long-term growth of the industry.
He suggested that mutual funds need to be investor-centric and should have a uniform cost structure to avoid conflicts within the industry. Mr Bhave is believed to have told the officials that the period for charging exit loads should be one year for all mutual funds, capped at 1%, irrespective of the amount invested by any client.
While rules say that funds can charge unitholders up to 7% on exit, they were imposing this load on the basis of the quantum of investments. A fund official said: “In short, SEBI has hinted that mutual funds should compete on the basis of performance of its schemes and not on the commission structure.”
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