Amfi may form panel to address direct sale plans

The Amfi general body meeting, scheduled on Thursday, will propose to form a committee to voice the mutual fund industry’s concerns over the recently-introduced direct plans to the capital market regulator Sebi.

Direct plans allow people to invest in funds directly - without incurring any incidental costs and at lower expense ratios. The committee will be headed by a senior mutual fund executive with representation from both fund houses and distributors. Direct funds may be cheaper than regular funds by 50 -75 basis points and they will bear a separate NAV than regular plans.

The decision to launch direct plans has not gone down well with most distributors who feel investors - both retail and institutional - will desert their advisory services and opt to invest directly in cheaper ‘direct fund plans’. The decision to form a joint committee was taken after a batch of distributors met Amfi chairman HN Sinor and appraised him of the problems faced by distributors in case direct plans are launched.