Rs. 150 will be charged for first time mutual fund investors and Rs. 100 for existing investors on investment above Rs. 10, 000
Mumbai: SEBI has introduced a transaction charge to
incentivize distributors. This move by SEBI
is intended to increase the number of folios and sale of mutual fund in smaller
towns.
According to the press release, distributors will be allowed
to charge Rs. 100 per subscription from existing clients and an additional
amount of Rs. 50 (a total of Rs. 150) from first time MF investors. The fee will be charged on investments on and
above Rs. 10,000. Investors do not have
to pay this charge separately. It will
be recovered from their investment and paid to distributors by the AMCs.
For example, if an
existing investor is investing a lump sum amount four times a year in
the same fund, he/she will be charged Rs. 100 four times. But if it is a new investor, then he would be
charged Rs 150 for the first transaction and hence forth an amount of Rs 100
thereafter per subscription. In a SIP, the transaction charges will be
recovered by the distributor in 3- 4 installments.
“We have introduced the incentives to attract distributors to
the mutual fund industry. Most of the small distributors had vanished from the
industry after the ban of the entry load. That led to the fall in folios. We
need these distributors to popularize mutual funds in smaller towns,” said U K
Sinha, Chairman SEBI.
There would be no transaction charges on any other activities
(such as redemption, change of address) on the investor.
The press release does not mention any date from which this
would be effective. The distributor community is waiting for the fine print of
the transaction charges but they feel it is a good move by SEBI.
“I feel distributor community needed an incentive. So this move by SEBI will bring back the small distributor,” said Sumeet Vaid, CEO Freedom Wealth Solutions Pvt Ltd.
Do you feel this charge is a boost for you? Do let us know.
