Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
RSS

News

Additional Expenses: Amfi tells MFs to pass on benefits to investors

Author: PTI/Wednesday, June 6, 2018/Categories: Mutual Funds

Additional Expenses: Amfi tells MFs to pass on benefits to investors

New Delhi - Mutual Fund industry body Amfi has asked asset management companies (AMCs) to pass on to investors the benefit of steep reduction in additional expenses charged for schemes, industry official said.

The market watchdog, through a notification issued on May 29, drastically slashed the 'additional expense' charged by mutual funds to just 5 basis points from 20 basis points, as part of its effort to help increase the penetration of such products among investors.

One basis point is one-hundredth of a percentage point.

The move is aimed at reducing the cost of investing in mutual funds (MFs).

In a letter written to fund houses, Association of Mutual Funds in India (Amfi) said the 15 basis points reduction in expenses should be passed on, by reduction in distribution commission by the AMCs, a senior official of a leading fund house said.

Besides, it has asked fund houses to "revise/ re-align their distribution commission pay out structure accordingly".

The board of Sebi in March had approved a proposal to reduce the additional expenses in respect of mutual funds from 20 basis points to 5 basis points.

Following this, Amfi had discussed the matter at its board meeting held last month and the board members had reiterated that the proposed reduction in expenses should also be passed on, by reduction in distribution commission by the AMCs.

Currently, there are 42 mutual fund houses managing assets to the tune of over Rs 23 lakh crore.

The regulator in 2012 had permitted MFs to charge 20 basis points of assets under management of the scheme in lieu of exit loads, or the sum mobilised from investors when they offload holdings.

In case of open ended equity and balanced schemes currently, the additional expense charged is significantly higher than the actual credit back of exit load to the scheme. In comparison, the additional charge is lower in the case of open-ended debt schemes.

Across all open ended equity and balanced schemes, an average exit load of around 5 basis points has been credited back whereas an average additional expense of 18-20 basis points has been charged to such schemes.

Print Rate this article:
No rating

Number of views (217)/Comments (0)

rajyashree guha

PTI

Other posts by PTI
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free