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  • MF News AMFI may discuss disclosing break up of all fund expenses in account statement

    AMFI may discuss disclosing break up of all fund expenses in account statement

    Apart from commission of distributors, it is being suggested that AMFI should consider asking AMCs to publish expenses incurred on fund management, R&T, custodian fee and so on.
    Nishant Patnaik Feb 9, 2016

    It is learnt that AMFI may take up a proposal  to disclose the breakup of all expenses incurred by a fund like investment management fee, R&T charges, custodian fee etc. in the account statement, said two senior fund officials.

    A senior official in the know of the development said that this is one of the proposals which AMFI is considering. Also, AMFI is discussing some other options to tackle the issue of disclosing commissions in account statement. These proposals are yet to be discussed with the board members. This proposal may be the part of the agenda of the forthcoming board meeting, he added.

    In the last board meeting, AMFI had decided to approach SEBI on the issue of disclosing distributor commissions in account statement as most fund officials are against this proposal. However, a few senior fund officials told Cafemutual that SEBI is unlikely to ease its stand on this issue.

    It may be recalled that SEBI had asked distributors to disclose commissions to investors through a 2009 circular on empowering investors through transparency in payment of commission and load structure, “Distributors should disclose all the commissions (in the form of trail commission or any other mode) payable to them for the different competing schemes of various mutual funds from amongst which the scheme is being recommended to the investor.”

    However, there is still ambiguity as to how distributors should go about making this disclosure. A senior fund official had earlier told Cafemutual, “Though SEBI had mandated fund houses to disclose the commission the commission structure of distributors, there was no mention on how it should be disclosed. Many fund houses take a signed acknowledgement from distributors that they have disclosed commissions to their clients. However, nothing much has happened in practice which is why SEBI is now nudging us to put such disclosures in the account statement itself.”

    Many distributors have vehemently opposed this proposal as they believe that such a disclosure will be regressive and induce pass back practice by investors.

     

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