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SEBI is likely to discontinue additional expenses in lieu of B30 retail assets. In fact, the market regulator has asked AMFI to share their comment on this, said three people aware of the development.
Currently, AMCs can charge an additional 30 bps for bringing retail assets from B30 cities. Fund houses use this additional TER to incentivize distributors for bringing retail investors from B30 cities.
This has come after the market regulator observed churning in assets from B30 cities. A senior MF official requesting anonymity said that SEBI has found instances of churning in B30 assets after one year due to additional B30 payout.
Another MF official told Cafemutual that the market regulator may allow fund houses to pay a flat onetime fee to distributors for bringing in new retail investors irrespective of their location.
If this goes through, distributors will be incentivized for bring retail investors irrespective of their geographical location.
A few days back, Usha Thorat, Chairperson, SEBI’s Mutual Fund Advisory Committee (MFAC) said that mutual fund accounts for just 10% of the household savings, which is very low. She said while AMFI has been spreading financial awareness through mutual fund sahi hai campaign, there is a need to introduce incentivization to mobilize investment from retail investors. She, however, said that such an incentivization should not be misused.
