AMFI has invited feedback from fund houses on the proposed ‘upfronting’ of trail in ELSS and SIPs, said two people familiar with the development.
Last week, AMFI is said to have decided to relax the new commission. The trade body is likely to allow ‘upfronting’ of trail in ELSS and SIPs.
In MF parlance, ‘upfronting’ means that the entire trail commission is paid at the beginning. This was a common practice in ELSS and other closed end funds.
According to the proposal, the ‘upfronting of trail in ELSS’ would be applicable to the extent of investment of up to Rs.1.50 lakh per PAN. Also, the maximum commission paid under this proposal will be capped. AMFI is said to have asked fund houses to give their feedback on this proposal.
Earlier, AMFI issued its best practice circular to AMCs in which it had asked fund houses to discontinue ‘upfronting’ of trail across all the schemes. Also, it has put a cap of 1% on upfront commission and given freedom to fund houses to decide trail commission. However, it should be within distributable TER.
Fund houses are expected to give their feedback on this issue by June 12.
