Mutual Funds can Pay Commission Upfront
on the First SIP..!
The Securities and Exchange Board of India (SEBI)
has allowed mutual funds to pay a portion of the trail commission upfront to
distributors for systematic investment plans (SIPs).
The regulator SEBI said trail commissions for
SIPs of up to Rs. 3,000 per month, per scheme, for an investor who is investing
for the first time in mutual fund schemes, can be paid upfront to distributors.
Only the first SIP purchased by the investor
shall be eligible for upfront commissions, SEBI said.
In case of multiple SIPs being purchased on
different dates, the SIP for which the installment starts on the earliest date
shall be considered for upfront fees.
At present, fund houses are allowed to charge an
additional TER of 0.30% (30 basis points) for getting business from retail investors
from beyond the Top 30 cities.
The regulator SEBI has clarified that only inflows of
up to Rs. 2,00,000 per transaction by individual investors shall be considered
as inflows from retail investors.
SEBI has also clarified that there shall be no
entry load on SIPs registered prior to August 1, 2009.
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