Bhave wants fund houses to draw lessons from distributors who have succeeded despite abolition of entry load
Mumbai: SEBI Chairman, C B Bhave, has asked fund houses to study the sales models of distributors who have succeeded in selling mutual fund schemes despite the entry load ban.
“Analyse distributors who succeeded and draw lessons from them,” Bhave said on Wednesday, while reiterating that zero entry load has not affected sale of mutual fund units in any way, according to a report in the Business Standard.
“One has to adopt a successful model,” the SEBI Chairman advised fund houses, according to the newspaper report. Fund houses are complaining about SEBI’s decision to abruptly end entry load from August 1, 2009, arguing there was no longer an incentive for distributors to sell mutual fund schemes.
He said people like to combine the ban on entry load with inflows into the mutual fund schemes, when the two cannot be linked.
Bhave said public perception about distributors not selling mutual funds was “not true”. While he acknowledged that subscription in existing equity schemes was a concern, he clarified there had been no “decline”, the newspaper reported.
“The numbers tell us a slightly different story. Subscription figures have increased in existing equity schemes in 2010 than in 2008-09. Money has gone down only in new fund offers (NFOs),” he said.
The Sebi chief also criticised mutual funds for launching similar schemes under the guise of NFOs. “Fund houses are launching schemes that are a replica of old ones. Distributors sell NFOs due to high commissions,” he said.
