AMFI’s operations and compliance committee has sought exemption from the criteria of three year track record and outperformance against benchmark for FMPs and index schemes from SEBI. FMPs, which are close ended products come with a fixed tenure, can’t have a track record.
SEBI’s circular issued in September 2012 states “Simple and performing mutual fund schemes shall comprise of diversified equity schemes, fixed maturity plans (FMPs) and index schemes and should have returns equal to or better than their scheme benchmark returns during each of the last three years.”
Meanwhile, the industry is waiting for clarity from the regulator.
All AMCs have to follow AMFI’s best practices guidelines in identifying schemes eligible for new cadre of distributors.
According to AMFI guidelines, a diversified equity scheme category should be large cap which should not include sector funds, small and mid-cap funds and should not have concentration in less than 30 stocks.
The list of eligible schemes is compiled annually based on the performance of the scheme during each of the last three financial years (April to March). The list is reviewed and modified every year in April. If these distributors submit any applications of schemes which are ineligible then AMCs reject such transactions.
AMCs have published the list of schemes which are eligible to be sold by the new cadre of distributors. SEBI has allowed business correspondents, insurance agents, FD agents, retired government and semi-government officials (class III and above or equivalent), retired teachers and retired bank officers with a service of at least 10 years to enroll as new cadre of distributors.
AMFI has waived off ARN registration fee for the new cadre of distributors till September 30, 2013.
