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12 Jul 2012 06:46 PM
MF officials expect SEBI to hike expense ratio and allow fungibility soon 
Ravi Samalad
 

Fund officials say there is very little chance of bringing back loads as consensus seems to elude most stakeholders.

Mutual fund CEOs are hoping that SEBI would soon hike total expense ratio (TER) and allow fungibility in usage of this expense corpus which will allow fund houses to manage their expenses efficiently.  The quantum of increase in TER has not been decided yet though.

Fund houses are currently allowed to charge a maximum of 2.50% as TER on equity funds.

 “The government was more focused on issues which could be resolved immediately. Tax related issues will be dealt with later but the government has not lost sight of it.  Increasing TER and brining fungibility in usage of expense corpus in high on the agenda,” says a CEO who was present at the meeting.

CEOs present at the meeting say that single cheque mechanism did not find favour with all the stakeholders.

As of now entry load is unlikely to come back. “There was a discussion on a proposal whether distributors can be incentivised by paying an incentive when clients redeem at a profit but it too didn’t find any consensus. There were suggestions related to KYC and pension funds also. The government doesn’t want any form of loads to come back,” says Dhruv Mehta, Chairman, FIFA.

The mutual fund advisory committee, comprising 14 members representing investor association, banks, fund houses and media is likely to give its recommendation to SEBI next week based on which a final decision will be taken.

Dr Thomas Mathew, Joint Secretary (CM), Department of Economic Affairs along with CEOs, Amit Tandon, AGM, SEBI, and FIFA were present at today’s meeting.

 
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