After SEBI asked fund houses to disclose the commissions of distributors in absolute terms in account statements, Securities and Exchange Commission (SEC) has introduced a similar rule in USA.
The SEC has approved the recommendations of its Investor Advisory Committee in which it has asked US AMCs to disclose fees in dollar terms while issuing account statements to investors, reports investmentnews.com.
SEC has moved a step further of SEBI by asking US AMCs to disclose the complete break up expenses charged to investors in absolute terms.
In its recommendations to SEC, Investors Advisory Committee said, “All types of investment costs, including costs for advice and services as well as costs for investment products, affect the total monies accumulated by an investor in a long term investment. Because of the important role mutual funds play as long-term investments for individual investors, however, and because costs can vary greatly from fund to fund, providing clear disclosure of mutual fund costs has long been a priority.”
“The Investor Advisory Committee recommends that the commission explore ways to improve mutual fund cost disclosures. The goal should be to enhance investors’ understanding of the actual costs they bear when investing in mutual funds and the impact of those costs on total accumulations over the life of their investment. In the short term, the Committee believes the best way to make investors more conscious of costs is through standardized disclosure of actual dollar amount costs on customer account statements. In addition, as part of a longer term effort to improve disclosures, we encourage the Commission to explore ways to provide context for cost information in order to improve investor understanding of the impact of those costs,” recommended the committee.
