MF body opposes SEBI proposal on no-load funds
FPSB has opposed the SEBI proposal to offer MF schemes to investors without charging any commission for direct investment. Smart ways to invest or spend!
By PTI |
MUMBAI: Financial Planning Standards Board India (FPSB), a leading financial body representing mutual fund (MF) industry, banks and insurance companies, has opposed the SEBI proposal to offer MF schemes to investors without charging any commission if investment is made directly.
Speaking to reporters, Chairman of the Board Shailesh Haribhakti, said, "the idea of no-load fund is consumer-centric but it may not be viable to introduce it in the form it has been suggested." He argued if no-load structure comes into place, mutual fund as an asset class may suffer.
The Board has, in turn, suggested that SEBI may allow a variable load structure where the commission could range from zero per cent to 2.25 per cent. Besides, it said that dedicated no-load funds by the industry may also be allowed.
SEBI had come out with a discussion paper on no-load mutual fund schemes in August and had invited comments from investors and industry. While investors have welcomed the suggestion, the industry has expressed reservations as it depends heavily on the distributors to sell mutual fund schemes.
As per estimates, there are over 60,000 distributors in the country that sell mutual fund schemes who are offered commission of 2.25 per cent for selling existing schemes. In case of a new scheme, the commission is six per cent.
Investors are charged a commission irrespective whether they buy directly from the mutual fund or through a distributor.
Speaking to reporters, Chairman of the Board Shailesh Haribhakti, said, "the idea of no-load fund is consumer-centric but it may not be viable to introduce it in the form it has been suggested." He argued if no-load structure comes into place, mutual fund as an asset class may suffer.
The Board has, in turn, suggested that SEBI may allow a variable load structure where the commission could range from zero per cent to 2.25 per cent. Besides, it said that dedicated no-load funds by the industry may also be allowed.
SEBI had come out with a discussion paper on no-load mutual fund schemes in August and had invited comments from investors and industry. While investors have welcomed the suggestion, the industry has expressed reservations as it depends heavily on the distributors to sell mutual fund schemes.
As per estimates, there are over 60,000 distributors in the country that sell mutual fund schemes who are offered commission of 2.25 per cent for selling existing schemes. In case of a new scheme, the commission is six per cent.
Investors are charged a commission irrespective whether they buy directly from the mutual fund or through a distributor.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
